A Game Analysis On Competition And Cooperation Of China Telecom Enterprises

In early 1990s, the once monopolistic telecom market in China began to face competition. From then on, the telecom industry saw a rapid increase in its performance after split-ups, restructurings and the change of regulation system. At the same time, however, the telecom industry is negatively affected by the existence of duplicated construction, price distortion and asymmetric competition. In this dissertation, Game Theory combined with Stackelberg model and Cartel model are applied to analyze the cooperative and non-cooperative status in competitive operation and infrastructure construction areas. Further more, the conditions for the stability of telecom Cartel and transformation conditions in infrastructure construction areas from non-cooperative to cooperative game are discussed, as well as the allocation efficiency under the situation of competitive operation and infrastructure construction areas. The conclusion is that as for competitive operation, non-cooperative game will lead to Pareto improvement and improve the resource allocation efficiency,for the existence of some private and tacit collusion in China telecom leading to a higher telecom tarrif which harms the interest of consumers and decreases the social wealfare; On the other hand, non-coorperativ game exists in telecom infrastructure construction, which leads to resource waste. To solve these problems, the government as the third player to be inducted is necessay and beneficial for stimulating stable cooperation among enterprises and improving resource allocation efficiency by altering the game rules. As for telecom infrastructure construction, coorperativ game is conducive to optimizing the resource allocation. At last,it is suggested that the government should change the game rules and regulate merger and acquisition of companies to avoid duplicated construction of infrastructure among telecom enterprises; meanwhile,through the split-up, to realize effective competition and solve price distortion for better development and resource allocation efficiency for China telecom industry.