The two largest companies in Telecommunication industry are Mexican telecommunications and television broadcasting. These two companies dominate the Mexico City media industry, therefore, exercising monopoly. It is because of the monopoly powers with the two companies that have resulted to increase in cost of doing business in Mexico. They are have set high prices thus limiting investment, and holding back the penetration of new technologies (Malkin 6).
According to International Telecommunication Union, only 26 percent of the Mexican households have access to the Internet compared to 45 percent in Brazil. The course of the monopoly in the market is the power that the legislators have over setting conditions in companies. These have cost the telecommunications sector consumers $ 25.8 billion a year (Malkin 8).
The court is likely to give a third company an operating license, this move is likely to turn things around, and break the virtual of monopoly. Televisa and America Movil confirmed of the likely occurrence of the ruling, and they were studying the measures. The introduction of Televisa is a good move. It will promote efficiency and competition thus avoiding abuse of such large companies.
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The management has to take charge and respond to different competitive environments. This should be in terms of pricing and output decisions. A firm’s pricing decision depends on, its competitive environment. The perfectly competitive market is where the buyers and the sellers are perfectly aware of the market. The firms have no power to influence prices because products are not unique, in addition to that, they cannot influence demand by advertising and product differentiation. They should make a decision depending on the current market price. In markets that are not perfectly competitive, most firms have some degree of market power.
A perfection competition is where there are many firms that are small related to the entire market and produce similar products. In a perfect competitive market, firms have no barriers to entering the market, firms are price takers, and the products in the market are standardized. In a monopolistic competition, the products in the market are differentiated. In addition to that, there are a significant number of firms and customers in the industry and no entry barriers in the market. Monopoly markets consist of only one seller in the market.
This is the case above, where a single seller has control over the entire market. In a monopoly market, there are many of entry barriers in the market, preventing competitors from entering the market. This can be highlighted from the above case. Oligopoly market: Is a market with fewer sellers and there are barriers to entering the market.
Malkin, Elisabeth. (2014) New Rules to Shape Telecom in Mexico. Retrieved on, March, 22,2014, from. http://www.nytimes.com/2014/03/08/business/international/new-rules-to-reshape-telecom-in-mexico.html