1.1 Read the following extract and answer question 1.1, 1.2. Evidence of domination Both the Competition Commission and Icasa found, in their inquiries, that Vodacom and MTN are dominant across the supply chain. Their dominance is even more entrenched by the spectrum-sharing deals that they have entered into with Cell C, Liquid Intelligent Technologies and Rain. Cell C is wholly reliant on MTN and Vodacom to provide mobile services, and Liquid and Rain are disincentivised from competing aggressively in the mobile market due to the lucrative deals they have struck to provide capacity to either Vodacom or MTN, or both. This has limited their ability to compete independently – leaving Telkom as the only entity in the position to be able to challenge the “cosy” market structure head-on. The economic argument being expressed in this extract is that of __________ and has the consequence of ______________. a) Market failure, externalities. b) Government failure, public goods being under-produced. c) Market failure, inefficient allocation of resources. d) Government failure, production possibilities. 1.2 The behaviour of the companies in the extract is in line with which of the following economic schools of thought? a) The Free Market School b) Marxist Economics c) Socialist Economics d) A Planned Economy
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1.1 Read the following extract and answer question 1.1, 1.2.
Evidence of domination
Both the Competition Commission and Icasa found, in their inquiries, that Vodacom and MTN are dominant across the supply chain. Their dominance is even more entrenched by the spectrum-sharing deals that they have entered into with Cell C, Liquid Intelligent Technologies and Rain. Cell C is wholly reliant on MTN and Vodacom to provide mobile services, and Liquid and Rain are disincentivised from competing aggressively in the mobile market due to the lucrative deals they have struck to provide capacity to either Vodacom or MTN, or both. This has limited their ability to compete independently – leaving Telkom as the only entity in the position to be able to challenge the “cosy” market structure head-on.
The economic argument being expressed in this extract is that of __________ and has the consequence of ______________.
a) Market failure, externalities.
b) Government failure, public goods being under-produced. c) Market failure, inefficient allocation of resources.
d) Government failure, production possibilities.
1.2 The behaviour of the companies in the extract is in line with which of the following economic schools of thought?
a) The Free Market School
b) Marxist Economics
c) Socialist Economics
d) A Planned Economy
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