The Mobile Phone Industry

Paper Summary:

This paper analyzes the structure and external factors that effect the mobile phone industry in Europe. It explains that Denmark provides an excellent example to examine the effects of price competition. Research finds that deregulation weakens the position of traditional price leaders and that new competition unseats them, if they use innovative business models. The author makes predictions about how deregulation will affect the markets in other countries using Denmark as a model. It claims that theoretical models were able to accurately predict behavior among price leaders and followers in a saturated market. The paper offers graphic representation to qualify points made.

Outline:
Current Market Characteristics
Industry History
Models of Price Leadership
The Participants of Price Leadership
Model Development
Definitions of Variables in the Linear Autoregression Model
Analysis
Conclusion
Works Cited

From the Paper:

"This model examined price leadership and followers in the mobile phone industry. However, other studies have found the same behavior and results in the online discount book market as well (Clay, Ouyang, Smith, and Wolff, 2002). The online airline industry is another example of similar pricing effects. This industry has been severely damaged by deep discount price wars. It faces similar price constraints and entry barriers as the mobile phone industry. The airline industry is another excellent example of the effect of price wars in a market that is oligopolistic in nature (Clemons, Hann, and Hitt, 2002). If these examples are any indication, it may be that the days of fixed pricing are a thing of the past (Cortese, 1998). "

Sample of Sources Used:

• Blattberg RC, Wisniewski KJ. Fall 1989. Price-Induced Patterns of Competition. Marketing Science. 8 (4): 291-299.
• Clay K, Ouyang S, Smith M, Wolff E. 2002. "Leader Follower Behavior? Evidence from Online Book Markets." Presented at the Workshop for Information Systems and Economics (WISE 2002): Barcelona, Spain; December 2002.
• Clemons EK, Hann I, Hitt LM. April 2002. Price Dispersion and Differentiation in Online Travel:An Empirical Investigation. Management Science 48 (4): 534-549.
• Cortese AE. March 4, 1998. Good-Bye to Fixed Pricing? How Electronic Commerce Could Create the Most Efficient Market of Them All. Business Week 3576: 70.
• Den Private Ingeniorfond, Technical University of Denmark, Lyngby, 1997 English, 557 pp, GBP 32 Telecom reform: principles, policies and regulatory practices. Retrieved April 6 from http://www.cordis.lu/euroabstracts/en/february99/ict1.htm.

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