Defend or refute the theory in the link below about why cell phone service is so expensive in Canada.

Asked on by lkballer24

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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If we are going to blame cell phone prices in Canada on the fact that its market is oligopolistic, we must first examine why the market is that way.  It may be that the market is naturally oligopolistic.  In that case, it may not be possible to lower prices by introducing more competition.

We must find out why the cell phone service market in Canada has so few players.  Is it because of government regulation?  Is it because of unfair business practices on the part of the big three companies?  If either of these is the case, then the prices might be blamed on the oligopoly.  If the market were opened to fair competition, prices would drop. 

On the other hand, there may be something about this industry that makes oligopoly inevitable.  For example, the cost of building and maintaining the necessary infrastructure might make it impossible for new firms to enter the market.  In that case, more competition simply would not be possible and we must look to other factors to account for the high prices.

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