Game theory analysis on price competition of mobile communication market in Turkey

The mobile communication adventure that started with the invention of the wireless telegraph by Guglielmo Marco in 1897 has evolved rapidly until today. Developments made it possible to study fifth generation cellular system (5G) based technologies such as internet of things, smart transportation services and smart factories. The Information Age we are in has created a network society while bringing together societies, all kinds of social and economic activities thanks to mobile communication technologies. The emerging new social structure causes an increase in the interest and need for communication technologies, while also changing the quality of supply and demand. This change rapidly increases the competition among sector stakeholders in the mobile communication market, where fast, uninterrupted and economical services are preferred. In the early stages, when there was no competition, the telecommunications services carried out under the state monopoly forced liberalization due to problems such as low service quality, low efficiency and high cost. While the public presence in the sector decreased with the privatizations, monopoly or oligopoly markets started to form. Today, while there are still monopoly mobile communication markets, oligopoly market structure is dominant in the telecommunication sector. In Turkey, the mobile communications market is oligopolistic structure, subscribe to Turkcell Communication Services Inc., Vodafone Telecommunication Inc. and Turk Telecommunication Inc. In this study, the price strategies of companies in the Turkish mobile communication market, where 92 out of 100 people are mobile communication subscribers, has been analyzed with the Game Theory approach. In the first stage of the study, the demand functions of Turkcell, Vodafone and TT Mobil was estimated by using the quarterly data between 2008:1-2020:4 period by ARDL method. In the second stage of the study, game matrices established by using prices strategies and estimated demand functions. The Nash equilibrium of the game that assumed as the static game of complete information found out in the strategy profile that all firms set the lower service price.