A/ ASSESSMENT RECAP

• Analyze the market structure of a selected industry in Vietnam, focusing on its fundamental characteristics and citing examples of specific firms within this industry, with supporting evidence.

• Compare your selected industry to the electronic retail industry in Vietnam, discussing similarities or differences in market structures, and assess the use of price discrimination strategies within your industry, supported by real-life data.

• Investigate a potential market failure in your chosen industry, detailing its effects and suggesting public or private solutions, with your analysis supported by well-cited research and data.

B/ DEFINITION

1. Market Structure - The organization of a market based primarily on the degree of competition among producers. Common types include perfect competition, monopolistic competition, oligopoly, and monopoly.

2. Price Discrimination - A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets.

3. Market Failure - A situation where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

4. Oligopoly - A market structure characterized by a small number of firms that have significant market power to influence price and other market outcomes.

5. Monopoly - A market structure where a single company or group owns all or nearly all of the market for a given type of product or service.

6. Perfect Competition - A market structure characterized by many firms, freedom of entry and exit, product homogeneity, and perfect knowledge of prices and technology.

7. Monopolistic Competition - A type of imperfect competition such that many producers sell products that are differentiated from one another (e.g., by branding or quality) and hence are not perfect substitutes.

8. Externalities - Costs or benefits arising from a production or consumption activity that affects third parties who did not choose to incur that cost or benefit.

9. Public Goods - Goods that are non-excludable and non-rivalrous, meaning no one can be excluded from use and usage by one does not reduce availability to others.

10. Adverse Selection - A situation where sellers have information that buyers do not have, or vice versa, about some aspect of product quality.

11. Moral Hazard - The risk that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.

12. Nash Equilibrium - A concept within game theory where the optimal outcome of a game is one where no player has an incentive to deviate from their chosen strategy after considering an opponent's choice.

13. Price Elasticity of Demand - A measure used to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.

14. Pareto Efficiency - An economic state where resources are allocated in the most efficient manner, and it is impossible to make any one individual better off without making at least one individual worse off.

15. Price War - A competitive exchange among rival companies who lower the price points on their products, in a strategic attempt to undercut one another and capture greater market share.

C/ DETAILED OUTLINE 

Introduction to the Industry in Vietnam

The market in Vietnam is characterized by its competitive landscape where multiple firms compete for subscribers. The industry typically operates under an oligopolistic market structure, which features a few dominant firms that exert significant control over market prices and services.

Part A: Market Structures 

Question 1: Fundamental Characteristics Market Structure

• Oligopoly: A small number of firms dominate the market, each holding a significant share of the market. These firms may engage in non-price competitions, such as improving service quality, offering extensive channel packages, and technological advancements in set-top boxes and streaming options.

Suggested ideas:

• Explain an oligopoly as a market controlled by a few large firms with significant market share. 

• Discuss how these firms make decisions based on each other’s actions and face high barriers that prevent new competitors from entering easily. 

• Highlight how these firms compete on service quality, channel variety, and technology rather than price. 

• Describe how technological advancements give these firms a competitive advantage, like enhanced content delivery systems. 

• Reflect on how oligopoly affects consumers, often providing better services and more choices but at higher prices. 

• Use industry examples to show how major firms use these strategies to position themselves effectively.

Hint: 

• In oligopolistic markets such as PayTV, firms often prioritize service differentiation and technological innovation to avoid price wars and maintain competitiveness. For instance, they may enhance customer service and offer custom channel packages to attract niche audiences, thus solidifying their market presence without competing directly on price (Severová, Kopecká, Svoboda, & Brčák, 2018). Additionally, investments in advanced set-top boxes that feature improved user interfaces and integration with streaming services illustrate a move towards digital convergence and enhanced customer experiences (Chevalier-Roignant, Flath, & Trigeorgis, 2019). These strategic choices, both in service and technology, are vital for firms in oligopolistic markets to secure a competitive edge and customer loyalty by influencing consumer choices and maximizing payoff relative to their competitors (Moghadam, 2019). 

• In Vietnam's oligopolistic Pay-TV market, VTC and Viettel Media are key players. VTC enhances its market stance through extensive channel offerings and investments in high-definition technology. On the other hand, Viettel Media, part of Viettel Group Corporation, uses its technological edge to merge digital TV services with mobile and internet solutions, improving customer connectivity. Notably, Viettel Media has pioneered 5G technology in Vietnam, emphasizing its commitment to innovation and customer satisfaction. These strategies exemplify how firms in oligopolistic markets like Pay-TV compete on service quality and product differentiation rather than price. (Viettel Group)​​ (Viettel Group)​.

• Barriers to Entry: High entry barriers exist due to the substantial initial capital required for content acquisition, infrastructure development, and regulatory compliance.

Suggested ideas:

• Capital Requirements: Emphasize the significant initial investments needed for content acquisition and securing broadcasting rights.

• Infrastructure Development: Outline the substantial financial and technological resources required to establish Pay-TV service infrastructure.

• Regulatory Compliance: Explain the complexities and costs of meeting regulatory standards, which can deter new entrants.

• Economies of Scale: Discuss how established firms benefit from economies of scale, making it difficult for newcomers to compete at similar costs.

• Market Dynamics: Reflect on how these barriers lead to fewer competitors and potentially higher consumer prices.

• Strategic Implications: strategies for new entrants to overcome these barriers, such as leveraging technology, focusing on niche markets, or forming strategic alliances.

Hint: 

• In the PayTV industry, high barriers to entry such as significant capital requirements and complex regulatory environments deter new entrants and strengthen the position of established firms. The substantial investments needed to acquire content, broadcasting rights, and develop both physical and digital infrastructure are often prohibitive for smaller companies (Crocioni, 2020). Additionally, navigating the intricate legal frameworks requires considerable ongoing legal expertise, adding to the entry challenges (Grandy & Hiatt, 2020). These barriers limit competition and ensure that only well-resourced firms can effectively compete in the market.

• In Vietnam's Pay-TV industry, high entry barriers are evident, particularly with major players like VTC and Viettel Media. These barriers stem from the hefty initial investments required for content acquisition, infrastructure development, and regulatory compliance. VTC capitalizes on its diverse channel offerings and HD technology, demanding substantial capital and technological infrastructure. Viettel Media, part of Viettel Group Corporation, differentiates itself by integrating digital TV with mobile and internet services, necessitating advanced infrastructure and innovation. Such strategies by VTC and Viettel Media exemplify the high entry barriers in the sector, where established firms use economies of scale and continuous technological investments to maintain market dominance and deter new entrants.

• Product Differentiation: Companies in the industry often differentiate their offerings through exclusive content, customer service quality, additional features like on-demand services, and bundled packages.