How the telephone market oligopoly in Costa Rica affected the telecom behavior and decisions of ICE, based on the analysis of the financial information and theory, since the opening on telecommunication markets?
OBJECTIVES
Main objective: Analyze the telephone market oligopoly behavior, applying the microeconomic theory to the financial states and information of ICE and their changes since the opening on telecommunication markets
Specific objectives:
- Compare the oligopoly market structure with the information of the telephone market in Costa Rica.
- Create a micro economical theory frame of the telephonic oligopoly in Costa Rica by the analysis the financial states of ICE and other statistics of telecommunication behavior. …show more content…
o Mutual interdependence:
“The actions of one firm have a major impact on the other firms in the industry. (…) Mutual interdependence exists within an oligopoly industry because each of the oligopolists has a sizable part of the market. As a consequence, when it changes its sales, its prices, or its marketing strategies, this oligopoly firm will likely affect the sales of other firms within the industry.” (S.f. Oligopoly).
This way, we could see how the oligopolies firms have to be alert about their competitor’s decisions and actions, because it will affect their sales and demand.
o Repeated interaction:
“The oligopolists within these industries have experience with the others within the industry (…) they develop some general sense of what is most likely to occur, how their rival will react to the current strategy; and they take into account this anticipated response when they design their current competitive strategy” (S.f. …show more content…
A choice based on the recognition that the actions of others will affect the outcome of the choice and that takes these possible actions into account is called a strategic choice. Game theory is an analytical approach through which strategic choices can be assessed.” (S.f. Oligopoly: Competition among the few)
The game theory represents a way to organize the possible decisions of a firm, considering the competitors possible decisions to, not only about the specific x theme, but also their responses to my decision; and what final decision may produce to me more profits, or payoff. These game or these possibilities analysis must be do frequently, because the competitors and the market itself keeps moving and changing. The most frequently used is the Prisoner´s dilemma model, about it we are going to present an example. Knowing the hard competition environment in oligopoly, the firms react and begin to create strategies that benefit all the members, with profits for all and without harming the competitors. This strategy is called