America's Cuban Conumdrum

Assignment 2: Market Model Patterns of Change

Sarah Bean

Managerial Economics and Globalization

Dr Elkanah Faux

July 29th, 2012

Abstract

The following essay will discuss the cell phone service industry that has experienced a pattern of change in a market model. The cell phone service industry is an oligopolistic industry that initially has very few competitors and now has many competitors. The pattern of change is demonstrated in technology of service, pricing plans, and quality of service. The paper will discuss this industry and explains the pattern of change and other qualities within the industry.

Introduction

The following essay will discuss the cell phone service industry and the changes that has occurred on the industry’s market model, which has traditionally been considered an oligopoly. This industry would be considered an oligopoly because as of fall 2011 only four companies which are Verizon, AT&T, Sprint Nextel, and T-Mobile together control 89% of the US cellular phone market. (http://www.cellphoneshop.net/) An oligopoly is a market form in which an industry is dominated by a small number of sellers. There are very few sellers in this market model and each seller will probably be aware of each seller’s actions.( http://stemmetje.com/2009/07/cellphone-oligopoly/)

There are six topics that will be discussed in the following essay. The first topic that will be discussed is to describe the industry and explain the general pattern of change of the particular market model. The second topic that will be discussed is to hypothesize the basic short-run and long-run behaviors of the model in the industry you have chosen in a “market economy.” The third topic that will be discussed is to analyze at least three (3) possible areas for the industry that could lead to transaction costs, and explain each in detail. The fourth topic that will be discussed is to speculate about the behavior that could result from these transactions...