Wellspring University Journal of Social and Management Sciences

GAMES THEORY: WHAT HAS IT TO DO WITH NIGERIA TELECOM INDUSTRY?

WARIBUGO SYLVA, ANWULI ASHLEY ATIEGOBA

July 18, 2024

Citation

Wellspring University Journal of Social and Management Sciences , Vol. 3 (1) (2024) , pp. 169-178

Details

ISSN: 2616-1296
Published: July 18, 2024
Status: Published

Abstract

This study examines the application of game theory to the Nigerian telecommunication industry through analytical modeling and deductive reasoning. The study addresses the question: what has game theory to offer the Nigerian telecom sector? Guided by the need to understand strategic decision-making in oligopolistic markets, the analysis employs illustrative parameters to apply Cournot, Bertrand, and Stackelberg models, explaining output competition, price competition, and strategic leadership respectively. The models predict that telecommunication firms in Nigeria operate under conditions of strategic interdependence where each firm's decision influences rival firms. The Cournot framework demonstrates that firms compete through output decisions and tend toward equilibrium. The Bertrand model illustrates that price competition can lead to reduced profits when firms offer similar services, while the Stackelberg model emphasizes that firms who take the lead in introducing new products influence follower firms. The study demonstrates that game theory provides a relevant analytical framework for understanding pricing strategies, market rivalry, innovation, and competitive positioning among firms. It concludes that game theory offers a structured approach to understanding telecom firm behavior in competitive environments. The study suggests that firms should adopt strategic planning, maintain balanced pricing strategies, invest in innovation, and leverage leadership advantages to sustain competitiveness.

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