SURNAME: Mbatha

NAME: Jackson
GRADE: 10c
SUBJECT: ECONOMICS
MARKS: 50
SUBMISSION DATE: 03 MAY 2024
MARKETS: OLIGOPOLY

INTRODUCTION:
 Oligopoly is a market structure characterised by a small number of large firms
dominating the market. This firms have significant control over pricing and can
influence market dynamics.

MAIN PART:
Nature of products sold in an Oligopoly Market:

 Homegenous or differentiated products along with certain entry barriers.

Most common form / type of none-price competition:

 Advertising and Marketing strategies

Role of the Independent Communications Authority of South Africa (ICASA):

 To develop regulations for the communications, broadcasting, and postal

services sectors in South Africa
 Issues and monitors licences to telecommunications and broadcasting service
providers.
Costs and Benefits of Oligopolistic competition:
  Oligopolies may provide more stable prices and often focuses on quality
production to compete for customers.
 However, Oligopolistic firms may collude to fix prices, leading to higher prices
for consumers.
 Businesses may engage in non-price competitions like advertising which can
be costly.
Impact of current energy crisis on fibre internet in South Africa:

 Data Centres: These components house the servers that keep websites,
apps, and various online services running. Power interruptions can lead to
service outages and data loss.
 Network Equipment: Fibre infrastructure includes various devices like fibre
optic cables, switches, routers, etc. Power cuts may interrupt these services
leading to internet outages.
 Service Providers: Internet Service Providers (ISPs) require power to
manage and monitor the network. Power failures could disrupt their
operational capacity, hindering service provision to consumers.
Economic and Social effects of collusion within an oligopoly:

 Higher Prices: Collusion often leads to higher prices as firms decide to set
prices at higher levels.
 Reduced Consumer Welfare: Higher prices reduce consumer welfare as
goods and services become more expensive.
 Entry Barriers: Colluding firms may create entry barriers, making it difficult
for new firms to enter the market and compete.
 Reduced Innovation: Collusion can stifle innovation due to firms not having
enough incentive to develop their products and services.
 Decreased Employment: Firms may prioritize maintaining high prices and
profits over expanding production and labour.
 Market Distortion: Collusion distorts market dynamics by artificially altering
supply and demand conditions leading to market inefficiencies.

CONCLUSION:
Impact of Price War on the Fibre Industry:
Based on my overall research, a price war in this industry can have both negative
and positive effects through the following factors:
Positive Effects:

 Consumer Benefit: During a price war, Businesses are more likely to reduce
their prices. For example, Metro Fibre reduced prices for some of their
packages and replaced one of them with a more enhanced package at no
extra charge.
  Innovation: To remain competitive, companies are tempted to invest more in
innovation and infrastructure. In this case, Frogfoot and Octotel increased
speeds on most of their FTTH products.
Negative Effects:

 Profit Erosion: Price wars can erode profits for companies involved as they
focus lowering prices to gain market share. While this may benefit consumers,
it can hinder companies’ ability to invest in future growth.
 Price Instability: Price wars often results in price instability which may hinder
consumers’ budgets.

BIBLOGRAHY:
 https://www.nationalgovernment.co.za/units/view/54/independent-
communications-authority-of-south-africa-icasa
 https://www.mycourses.co.za/impact-of-energy-crisis-on-fibre-internet/
 https://mybroadband.co.za/news/fibre/396971-fibre-price-war-south-
africa-isps-slash-prices-and-increase-speeds.html/amp