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 Question 1 Assume that there are two major telecommunication companies operating in a country

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 Question 1 Assume that there are two major telecommunication companies operating in a country. The first promises to match the other's prices. The other promises always to sell at 1 cent cheaper than the first for each 1 MB data plan. Describe the likely sequence of events in this "game theory" and the likely eventual outcome. Could the promise of the second company be seen as credible?

 

Discuss and provide the expected outcomes with examples.

                                                                                                                                                    

 

Question 2

In perfect competition market and monopolistic competition, invention and innovation are promoted by the competition among the rivals. Are there any features of free-market capitalism which would discourage innovation?

 

Evaluate and justify your argument with examples.

                                                                                                                                                                  

Question 3

In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets.Discuss the advantages and disadvantages of such an approach to ensuring the "best interest of society" in promoted these markets. Provide your evaluation on the above question with relevant examples.