Business Case Studies, Microeconomics Case Study, Mexican Telecom Industry, Monopoly

print page
Tell A Friend
Bookmark
 

Case Categories

Microeconomics Case Study

IBS CDC IBS CDC IBS CDC IBS CDC RSS Feed
Case Title:

Mexican Telecom Industry: (Un)wanted Monopoly?

Publication Month and Year :  June 2009

Authors:  Hepsi Swarna & Saradhi Kumar Gonela

Industry: Telecommunication

Region: Mexico

Case Code: ME0018

Teaching Note:  Available

Structured Assignment:  Available


OR





Abstract:
This case helps to analyse how Telmex and Telcel are aided by various factors to maintain their dominance. It can also be used to determine the market concentration and monopoly power of a company. What are the social costs of a monopoly? How weaknesses in the legal and political systems help in upholding unhealthy business environment? How lack of competition is detrimental for an economy?

For almost all the Mexican telephone users – either fixed line or wireless – it’s a love and hate relation with the nation's biggest telecom company, Telmex (and also its mobile phone offspring Telcel). The company is appreciated for, almost single-handedly, developing the telecommunications industry in the country, from the wilderness prior to its privatisation and expanding the foot-print to nook and corners. However, it is also accused of charging irrationally higher charges and thereby denying a vast majority of Mexicans a telephone connection – either fixed line or wireless. The company was privatised in 1990 and was granted a seven competition free years of operations. Even after this time elapsed, the company enjoys same status due to various reasons, most prominent among which are said to be weak regulations and the affinity of the company's management with political power corners. The company is accused of thwarting competition in any form and in effect ensuring its dominance. Telmex enjoys around 90% of fixed line customers and Telcel enjoys around 72% of mobile customers in mid-2008.

Pedagogical Objectives:

  • To understand market structure of a monopoly and determine the market concentration and monopoly power of a company
  • To analyse price determination and social costs of a monopoly
  • To understand how a weak regulatory authority and absence of enforcement of antitrust laws can help a company to maintain its dominance
  • To analyse how a dominant firm thwarts competition and the importance of competition for Mexican economy.

Keywords : Monopoly, Characteristics of Monopoly, Sources of Monopoly, Market Concentration, Monopoly Power, Price Maker, Deadweight Loss, Price Maker, Price and Output Determination in Monopoly, Price Discrimination, Degrees of Price Discrimination, Abusing Market Power, Anti Trust Law, Competition, Anti-Competitive Policies, Imperfect Competition, Regulatory Authorities, Carlos Slim, Mexican Telecommunication Industry, TelMex, COFETEL, Mobile Phones in Mexico, Roger Noll, Managerial Economics, Microeconomics, Economics for Business, Business Economics, Economics for Managers, Paul Samuelson

Recently Bought Case Studies

    Recently Bought Case Studies
advertisement

    Executive Interviews

  • Tamara J EricksonTamara J Erickson

    Tamara J Erickson, President nGenera Innovation Network
    Speaks on Managing Troubled Times
  • Martin LindstromMartin Lindstrom

    CEO and Chairman of the LINDSTROM company and the Chairman of BUYOLOGY INC (New York) and BRAND sense Agency (London)
    Speaks on Marketing in a Downturn
  • Jeanne M BrettJeanne M Brett

    DeWitt W Buchanan, Jr., Professor of Dispute Resolution and Organizations at Kellogg School of Management, Northwestern University.
    Speaks on Multicultural Teams
  • View All Executive Interviews»




Contact us: IBS Case Development Centre, Survey No. 156/157, Dontanapalli Village, Shankerpalli Mandal, Ranga Reddy District, Hyderabad-501504, Andhra Pradesh, INDIA, Phone: 08147-236660/61/62/72, Fax: 08147-236653,E-mail: casehelpdesk@ibsindia.org

©2003-2013 IBS Case Development Centre. All rights reserved. | Careers | Privacy Policy | Terms of Use | Disclosure | Site Map xml sitemap