Case Study
The case is about the growing dominance of Indian telecommunications company Reliance Jio Infocomm Limited (Jio) in the Indian telecom sector. Jio entered the Indian market in 2016 with a host of freebies, including unlimited calling and data plans. Its entry revolutionized the telecommunication sector across the country. Its aggressive and innovative tariff plans helped Jio become the fourth-largest telecom provider in India within six months of its launch. Even after the freebie period ended on March 31, 2017, Jio continued to offer the cheapest data plans as compared to its rivals. This helped it maintain its competitive edge in the market. Joi's dominance continued and it soon surpassed other major players in the market. Jio's rise led to consolidation in the market, with two of the top players, Idea and Vodafone, announcing a merger that left the country with three major telocom players. Jio's continuous strong run changed the dynamics of the Indian telecom industry, with experts opining that it would soon monopolize India's telecom sector.
The competitors who were experiencing shrinking revenues, mounting quarterly losses, and high debt were taken aback when in October 2019, the Supreme Court of India gave a ruling directing Airtel and Vodafone Idea to pay dues amounting to Rs. 410 billion and Rs.400 billion respectively toward licensing fees and spectrum charges. Given the financial condition of these companies, they would find it difficult to pay the dues. These companies were desperately looking to the govermment for some relief measures that would enable them to stay on in the market. The cumpetitors" problems gave Jio ample time to execute its plans and consolidate its position at their cost. Jio's cheap pricing seemed attractive in the short nun, but given the fim's investment in network coverage, quality, and technology, it was doubtful whether it could continue to offer low prices in the long run.
QnA:-
Q.1. Monopoly is a market structure characterized by all the following features except:
(A) The film is a dominant seller of a good or service having no close substitutes.
(B) The existence of high barriers to entry.
(C) The firm enjoys economic profit even in the long run.
(D) The firm is the price taker.
Q.2. If the price elasticity of demand is greater than 1, a monopoly's
(A) Marginal revenue is zero.
(B) Total revenue decreases when the firm lowers its price.
(C) Marginal revenue is negative.
(D) Total revenue increases when the firm lowers its price.
Q.3. Which of the following is LEAST likely to be a monopoly?
(A) The sole owner of an occupational license.
(B) A pharmaceutical company with a patent on a drug.
(C) A store in a large shopping mall.
(D)The holder of a public franchise.
Q.4. Monopolist:
(A) Face downward stoping demand curves.
(B) Are price takers
(C) Have no short-run fixed costs.
(D) Maximize revenue, not profits.
**All The Best**
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