Telecommunication

As we learned from our market model, the perfect competitive market, which let the market itself to generate its efficiency, will not result in deadweight lost. However, a monopoly market without price discrimination will not be as efficient as the competitive one. It may charge high price to consumers since there are not subsidies; and the consumers may complain that there are no alternative producers which could provide better services. The telecommunication industry used to be a monopoly market, with several dominate firms are charges high price, but not, a transition from monopoly to competition is being made as reported by ICT Industry and Markets. Although the market will be leading into more efficiency, people still have several concerns. The new added firms may not be such competitive as the former ones since “the nature of telecommunications networks provides strong advantages to well-established network operators.” This pro-competitive will make it extremely hard for new competitors to launch their program. The control over essential facilities may also be a challenge to the newly added firms due to the technical difficulty. One more thing is, the telecommunication industry is often defined as a consumer inertia market; though people wish to have better services over other company, it’s hard for them to switch from an incumbent that had served them for many years. It seems everything have two sides, if the new firms choose to enter the industry because of its transition towards competition, they must first suffer a terrible period; but if firms decide to enter the industry later, by which time it’s already a competitive market, they would have lost the opportunity to earn some extra profit in monopoly period. These are something I found when comparing competitive market versus monopoly market; hope to get ideas from different people, too.