THE ENTRANCE EFFECT OF A FOURTH OPERATOR ON IRAN'S MOBILE PHONE COMPETITIVE MARKET: GAME THEORY APPROACH

To foster competition in the mobile phone industry and foster proposing variety services to the consumers, the Iran government decided to enter a fourth operator to the country's mobile phone market at 1392 alongside Hamrah Aval ,Irancell and Rightel,who held, respectively, Fifty-nine hundredths, thirty-seven hundredths and four-hundredths of the market. As it seems no economic studies have been published on the topic, this research has analyzed the effect of the entry of a fourth operator to the country's oligopoly market by examining two questions: 1) whether the entry of a fourth operator will create or extend competition (regulator`s dream) and 2) whetear the entry of a fourth operator will create or extend competition (regulator`s nightmare). To this purpose, by using a stylized model of France's mobile phone market, and also static and dynamic models in game theory as ''Cournot oligopoly'', ``monopolistic cartel'' and ``partial cartels (oligopoly with a Cournot competitive fringe)``. The result showed when Hamrah Aval, Irancell and Rightel are in cournot competition and extend it to the new operator: 1) Compared to three-way Cournot competition the maximum most realistic price fall is 1.36% when fourth operator is as efficient as Rightel and could be 0.37% when Hamrah Aval is averagely efficient. 2) All three operators experience losses, so the total surplus decreases, while consumer surplus increases, which means the entry of a new operator and more competition is good for the consumers. 3) If Hamrah Aval, Irancell and Rightel are in competition and extend it to the fourth operator, this situation will be sustainable and switching to the ``monopolistic cartel`` and ''partial cartels`` is equally unlikely.