Game Analysis of Price Competition and Cooperation of Telecom Operators

Telecom industry plays an important role in national economic development because of its extensive external economic advantages; thus, it is very important to discuss price competition and cooperation of the telecom operators. According to the game model built by us, this study shows that the reason for the price wars among telecom operators is because when one telecom operator reduces the current prices, its market share will be larger, and even its profits will increase. In the repeated price game, the price equilibrium point in a rational competition is the cost of the telecom operator whose output is lower; and the price equilibrium point in a vicious competition is the marginal cost of telecom operators; and the more the number of the telecom operators, the more difficult to maintain monopolistic price. In the repeated price competition and cooperation game of telecom operators, in order to increase social welfare and avoid vicious price competition, price cap regulation is a preferable control mode, which provides a preferable pricing flexibility for telecom operators.