Economics of Telecommunication 1.From an economist's viewpoint, what would you expect to happen in the market...

Economics of Telecommunication

1.From an economist's viewpoint, what would you expect to happen in the market as the number of wireless providers goes from 2 to 8? Name and explain at least 3 things.

Expert Solution

Ans. When the number of wireless providers goes from 2 to 8, then the following things could happen:

1. Competition increases: Earlier their were only two firms so they could be behaving in a cartel but now there are 8 firms, so a situation like perfect competition. They compete with each other in order to expand their market share.

2. Lower price: When market supply rises, it means less price of products.

3 Better quality and durability: When there is so much competition, each seller would prefer to provide best quality and reliable products.

4. More R&D : As there are more firms, they would spend more on research and development in order to invent new type of products, technology so that they can capture the larger market share.

5. More Marketing: They all spend more on advertisement and marketing of their product.

6. More employment in telecommunication sector: As the number of providers increases, they will hire more labor and capital. So, employment increases in this sector.

Rahul Sunny answered 2 years ago

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