Tiltled Paper

Let me first start by defining oligopoly. According to McConnell and Brue Oligopoly is defined as a market that is dominated by a few large producers of a homogenous or differentiated product. There are a large number of cell phone manufactures in the world. If you look at the all of the number of cell phone manufacturers you will see that the numbers are in the thousands. However, cell phone providers are few and in between. There are 11 main cell phone providers in the United States. These are Verizon Wireless, AT&T, Sprint Nextel, T-Mobile, Boost Mobile, Cricket, Virgin Mobile, U.S. Cellular, Metro PCS, Tracfone and Liberty Wireless. I would say that the cell phone provider industry is and Oligopoly.

The cell phone provider industry is an oligopoly for a number of reasons. First, there are only a few firms that are represented in the cell phone provider industry (The cell phone provider industry, is the industry that provides cell phones and cell phone plans at a cost to the consumer). Second, this industry is limited by mutual interdependence. According to www.bookrags.com,"firms realize the mutually interdependent firm realizes that its price drops are more likely to be matched by rivals than its price". Lastly the cell phone provider industry is an oligopoly because there are significant entry barriers that restrict competition to enter the market. One of these restrictions are access to new and expensive technologies.

As of the fourth quarter 2008, Verizon, AT&T, Sprint, Nextel, and T-Mobile together controlled 89% of the US cellular phone market. According to www.dailywirless.org ," at the end of the second quarter of 2009 Verizon Wireless controlled 32% market share, AT&T controlled 29% market share, Sprint Nextel controlled 18%, T-Mobile controlled 12 % and the rest of the industry controlled only 9%". If we use the concentration ratio we will see that the top four providers have a market share of 91% which definitely makes the cell phone industry an oligopoly.

There are a lot of pending litigations against cell phone providers in the United States. According to www.wireless2.fcc.gov there is a pending litigation against AT&T. This pending antitrust litigation accuses AT&T of "monopolization and illegal tying based on the defendants' alleged practices of "bundling" of wireless phones and wireless service". The defendants have filed an injunction asking the U.S. District Court to add a charge of conspiracy stating that they knew that they were creating monopolization and tying agreements. The U.S. District Courts have denied this finding and the other charges of monopolization and tying agreements is still pending at this time.

Overall, I do believe that the cell phone industry is an Oligopoly and that it is really close to a monopoly. The U.S. Government has recently blocked AT&T and T-Mobile from merging together stating that this