According to the news reported by Taiwan News on 8 Mar 2017, entitled Chunghwa Telecom, Taiwan...

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According to the news reported by Taiwan News on 8 Mar 2017, entitled "Chunghwa Telecom, Taiwan Mobile warned of violating fair trade laws as price war continues" as below (Chunghwa Telecom and Taiwan Mobile are two big telecommunication companies in Taiwan) TAIPEI (Taiwan News) -- Fair Trade Commission (FTC) Chairwoman Huang Mei-ying warned Chunghwa Telecom (CHT) and Taiwan Mobile Co. (TMC) that they both may be in violation of fair trade laws if they collude to withdraw from the low-cost 4G mobile market...... Both companies had promised to phase out their least expensive 4G plans at the end of February but instead extended the promotions. If the companies agree, as media rumors have suggested, to exit from the low-cost plans simultaneously, they would be in violation of fair trade laws and may face penalties..... The top three telecoms in Taiwan launched flat-rate 4G plans three years ago but have been unable to phase out the plans due to competition. ....(omitted) The news reported that the local govemment is afraid of big companies' collusion to charge a high price for their products. Therefore, the government wamed the telecommunication companies do not try to cellade with each other for charging 4G network high prices. Otherwise, the companies will be punished by the government if they collude. However, will the telecommunication companies collude? This question is going to deal with this question. There are 3 big telecommunication companies in Taiwan providing nearly the same 4G network services: Chunghwa Telecom (CHT), Taiwan Mobile (TMC), and Far EasTone Telecommunications (FET). For any telecommunication companies mentioned above, their goals are always to maximize your profits and attract as many users as you can. Suppose there are TWO different monthly charge schemes for any telecommunication companies: $399 and $599. a) What is the market structure in this question? Explain your answer briefly (3 points) b) Suppose you are the manager of CHT, will you charge $599 if your rivals are charging $399? Explain your answer briefly. (3 points) e) Suppose all the companies collude with each other and they charge the same price $599. Now, you are the manager of CHT, will you betray the other two companies by charging $399? Why or why not? Explain your answer briefly (4 points) d) According to your answers in parts (a) to (c), will the telecommunication companies collude to charge a high price? Explain your answer briefly (4 points) According to the news reported by Taiwan News on 8 Mar 2017, entitled "Chunghwa Telecom, Taiwan Mobile warned of violating fair trade laws as price war continues" as below (Chunghwa Telecom and Taiwan Mobile are two big telecommunication companies in Taiwan) TAIPEI (Taiwan News) -- Fair Trade Commission (FTC) Chairwoman Huang Mei-ying warned Chunghwa Telecom (CHT) and Taiwan Mobile Co. (TMC) that they both may be in violation of fair trade laws if they collude to withdraw from the low-cost 4G mobile market...... Both companies had promised to phase out their least expensive 4G plans at the end of February but instead extended the promotions. If the companies agree, as media rumors have suggested, to exit from the low-cost plans simultaneously, they would be in violation of fair trade laws and may face penalties..... The top three telecoms in Taiwan launched flat-rate 4G plans three years ago but have been unable to phase out the plans due to competition. ....(omitted) The news reported that the local govemment is afraid of big companies' collusion to charge a high price for their products. Therefore, the government wamed the telecommunication companies do not try to cellade with each other for charging 4G network high prices. Otherwise, the companies will be punished by the government if they collude. However, will the telecommunication companies collude? This question is going to deal with this question. There are 3 big telecommunication companies in Taiwan providing nearly the same 4G network services: Chunghwa Telecom (CHT), Taiwan Mobile (TMC), and Far EasTone Telecommunications (FET). For any telecommunication companies mentioned above, their goals are always to maximize your profits and attract as many users as you can. Suppose there are TWO different monthly charge schemes for any telecommunication companies: $399 and $599. a) What is the market structure in this question? Explain your answer briefly (3 points) b) Suppose you are the manager of CHT, will you charge $599 if your rivals are charging $399? Explain your answer briefly. (3 points) e) Suppose all the companies collude with each other and they charge the same price $599. Now, you are the manager of CHT, will you betray the other two companies by charging $399? Why or why not? Explain your answer briefly (4 points) d) According to your answers in parts (a) to (c), will the telecommunication companies collude to charge a high price? Explain your answer briefly (4 points)

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a The market structure in this question is an oligopoly This is because there are only three major c... View the full answer