Non-price competition

Non price competition is among the characteristics of Oligopoly market where firms compete to win the market share by aggressive advertisement programs rather than price. The climax of Non-price competition is the formation of Cartels which are illegal in most economies.

1. NON-PRICE COMPETITION AND CARTELS Hezron Sadock

2. CONTENT Non-Price Competition Introduction Price war and how it leads to non- price competition Market share strategies in non-competition Collusive Oligopoly Tacit oligopoly and Cartels Price and output determination in Collusive oligopoly Cartels and factors for its formation

3. INTRODUCTION Features of Oligopoly Few sellers Homogenous or non-homogeneous products(Differentiated product) Entry barriers Interdependence in decision making Non-Price Competition What is Non-Price Competition? It is the approach in oligopoly market where major players of the same or differentiated good, opt for other marketing strategies other than price competition to gain the market share.

4. PRICE WAR Competition among firms that produce the homogeneous or differentiated goods to win the market share by the means of lowering product prices. At the end, price war benefits customers than the firms themselves. Firms will thus opt not to compete by lowering prices but use other approaches to win customers and the market share in the industry

5. Reliance Jio: The Story that reshaped India Telecommunication Industry Entered in Sept 2016 Market share of 22.4% Free calls,SMS and data for first 6 months. Market share of 34.7% Forced to merger with Idea Market share 31.7% BSNL has 11.2%

6. MARKET STRATEGIES IN NON-PRICE COMPETITION Aggressive market strategies Product bundling Influencing value perception to customers Branding Offering better service

7. The extreme case of non price competition is the formation of Collusive Oligopoly or Cartels.

8. COLLUSIVE OLIGOPOLY A greement among rival firms of the same good, in mutual interest on various accounts such as price, market share or production output. When the agreement is formal it is known as Explicit Collusion or Cartel When the agreement is informal it is called Tacit Collusion

9. Price output determination for collusive oligopoly

10. CARTELS A formal agreement among firms producing homogeneous good. Agreements may involve: Price or total industry output, Market share or allocation of customers, Allocation of territories Division of profits . Types of cartels: Centralized Cartels - There is a centralized body which decides on price. Market Cartels - Members divide the market and fix the price independently.

11. Factors for Cartel formation and Sustainability 1. Number of firms in the industry. Fewer the firms, easier to form and sustain the cartel, and vice versa. 2 . The Nature of the product. Better for homogeneous goods than differentiated goods. 3. Cost Structure. Without the common cost structure, survival of the cartel will be in question.

12. OPEC Organization of Petroleum Exporting Countries Members: 12 countries Control over 42% of the petroleum industry share as per 2012 Have more than 70% of the total world oil reserves

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