The success of any company is directly dependent on the competition. Competing companies influence each others decisions in a constant struggle to remain the top competitor. An oligopoly is a situation where there are very few producers of a product or providers of a service that compete for the consumers dollars. Each company influences company actions on an ongoing basis to strive to stand out to the consumers. Verizon Wireless is an oligopoly because it is in constant competition with Nextel/Sprint and AT&T/Cingular to be the number one cellular phone service provider. There are a few more cellular companies but the number is small due to entry barriers. A barrier to entry is anything that prevents outsiders from entering a market such as patents, copyrights, professional certifications or strict qualifications.
When cell phones and cell phone service companies first began, the only company was AT&T. In 1947, AT&T started mobile telephone service in the United States. In the 1950’s the first car phones were developed. These phones were heavy, large and operated on the car battery. Since AT&T was the only company to offer the service, it was very expensive and only the very wealthy could afford to have them. Due to supply and demand, over the years the technology has advanced and the cell phone is now common in every household. The service however is not the same in every household. As the technology progressed other companies formed. Verizon Wireless, Nextel/Sprint and AT&T/Cingular are now the top providers. Each of these companies is an oligopoly. All of the companies concentrate on the percentage of the market they control. A fluctuation of as little as one percent can be a major financial loss or gain. In the graph listed below, AT&T/Cingular has the highest percentage of customers. Since this company is in the top position, AT&T/Cingular could be referred to as the “price leader”. When other companies follow the price leader, it tends to keep the prices high and is not good for the consumer. When companies challenge the price leader, the prices drop. Each company watches the others like a strategic game of chess. When one company makes a move to become more appealing to the consumer, the others are soon to follow with a similar offer. In the cellular service industry, the profits come from the number of customers signed up for monthly service. The companies constantly compete by offering “deals” that make the consumer think they are saving money or getting a great deal. When Verizon Wireless offered “free phones” the public was anxious to try out a cellular service. The other companies soon offered “free phones” with a carrying case and a free car charger. The companies do not make the biggest profits from the phones. The biggest profits are made from consumers agreeing to the monthly service fee, exceeding the allotted monthly minutes, late fees, roaming fees and penalty fees for cancelling a contract early. None of these hidden costs are in bold print when the consumer signs up for the service. Each company tries to offer
Exploiting the vulnerable 5 Tenzin Jurmey Econ 1000 Final paper. 12/9/2012. Exploiting the Vulnerable. The fast food industry sees children as a future as well as current market and hence brand loyalty at a young age helps in the quest of continued sales later. $15-17 billion is spent by companies advertising to children in the US. Over $4 billion was spent in 2009 by the fast food industry alone. Children are naïve about advertising and are easily controlled and exploited by the…
BANKWEST CURTIN ECONOMICS CENTRE WORKING PAPER SERIES 13/9: A ZERO INFLATED REGRESSION MODEL FOR GROUPED DATA Sarah Brown, Alan Duncan, Mark Harris, Jennifer Roberts and Karl Taylor business.curtin.edu.au/bcec This paper was written by researchers affiliated with the Bankwest Curtin Economics Centre (‘the Centre’). While every effort has been made to ensure the accuracy of this document, the uncertain nature of economic data, forecasting and analysis means that the Centre, Curtin…
In the article “The Great Housing Rebound of 2012,” Christopher Matthews discusses how there is hope for Americans in the housing market, and on how the Federal Reserve is the most important factor in increasing home prices. Matthews argues how unemployment plays a large role in the housing markets recovery, and how in order to have higher prices, buyers need to be able to make enough money to afford the house. Unemployment needs to decrease in order for America to truly be a strong economic force…
A.M.D.G. Gabrielle Ruane 1/21/2015 Econ 202-Jorgensen The Decision of a Lifetime When you are about to graduate high school, you have to start making decisions that matter. You have to be mature and rational in your decision making. Especially when it comes to one of the most important decisions in your young adult life, where to go to college. For some the answer is easy, such as going to your parent’s alma mater or the school that offered you a scholarship. On the other hand, you have people that…
hydrogen atoms polarly and covalently bonded with a single oxygen atom in the liquid form. Homogeneous goods, such as water, are perceived as identical to the consumers’ eyes. Essentially, they are the same in size, taste, quality, and value. In this paper, I will be discussing another commodity and how it is perceived in the market as a homogeneous good. I will be discussing white rice and the implications of the economics of rice as a homogeneous good. The good that each firm produces is identical…
The RV industry has been around for a very long time. Americans, it seems, have been destined to be RVers since the earliest days that explorers set foot on this continent. Adventurers at heart, settlers came in search of freedom and opportunities to grow and discover. And discover they did, first by ship, then by horse, in groups by Conestoga wagon trains and ultimately, by motorized vehicles that ushered in the RVs of today (Gorving.com). A century ago, the popularization of the automobile…
Jordan Olson R. Martin ECON 201 30 November 2012 How the Past Decided Our Future Our economic world is one constantly moving cycle of cash, products, and services. The way our system works is different than any other system out there. It is made of made up of many thoughts and ideas and people have tried to perfect it over the years. When it comes to thought of economics and how money changes hands and how to make sure that money retains the value it is supposed to have there are so many different…
Allison Cassidy Econ*201*301 11/16/2014 Econ 201 301 Macroeconomics Final Report Even though a lot of people seem to be talking about how bad our economy is and how bad things like the unemployment reals and Real GDP are, the economic situation is appearing to be looking up overall. For example, take a look at the growth in Real GDP. According to The U.S. Bureau of Economic Analysis, the Growth in Real GDP in 2014 went up 3.5 percent and 4.6 percent, respectively. These numbers are positive and show…
Therefore, this paper introduces the concept of VOI in a non-theoretical way and provides a systematic and critical review of the evolving methods and applications of VOI in academia and practice. 2 VOI Analysis To the extent that decision making between alternative…
that have altered the concept of flying. Are these changes positive? This paper will provide a brief history of Southwest Airlines, including its production function, risk, uncertainty, and the impact that government regulations have made domestically and abroad. It will also investigate pricing trends, new products/services, profitability, the competitive market, and non-price competition. The final analysis of this paper will describe specific recommendations regarding changes and improvements…