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An Empirical Study of Game Theory and its Application in Telecommunication industry in Kenya
Subject area: Management and Commerce · Area of research: Economics
Abstract
The telecommunication companies in Kenya are characterized by oligopolistic kind of a market structure, and where each company devices a strategic move to attract more customers by providing satisfactory and competitive edge services. In this study, game theory which is one of the operational research modelling techniques is used to evaluate the performance of telecommunication companies in Kenya and hence, game theory plays a critical role in the study of decision optimization among multiple decision-making players that interact and compete with each other. This paper therefore sets out to analyze the competition models of Kenya two leading telecommunication companies; Safaricom and Airtel Kenya. Safaricom is the dominant player with average market share of 76.50% for mobile voice, SMS traffic, mobile broadband and mobile money while Airtel Kenya controls an average 22.23% for such services, this is based on last quarter of 2024 report by Communication Authority of Kenya. Game theory methods are applied to provide scenarios on how each company maximize profits given the strategic choice of the other, and this is achieved by studying services offered by each of these companies. Each company strives to attract customers through provision of satisfactory and competitive services. While using game theory operational methods, we will use payoff matrix, graphs and charts to analyze the performance of the two leading telecommunication the companies in Kenya. This study examines the pricing strategies for mobile voice calls, SMS traffic, mobile broadband, and mobile money, customer retention strategies, and cooperative strategies and further, provides insights into market dynamics, and potential equilibria for Safaricom and Airtel Kenya.
Keywords
Game Theory, Telecommunication Industry, Players, Payoff Matrix, Strategic Choices, Nash-equilibrium.
References
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[2] Démuth, A. Game Theory and the Problem of Decision–Making. Edition Cognitive Studies; 2013. ISBN: 978-83-7490-607-4.
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How to cite this paper
@article{1708153,
author = {MOSES O OTIANG?, Dr Yasin Ghabon},
title = {An Empirical Study of Game Theory and its Application in Telecommunication industry in Kenya},
journal = {Iconic Research And Engineering Journals},
year = {2025},
volume = {8},
number = {10},
pages = {1487-1495},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1708153.pdf},
abstract = {The telecommunication companies in Kenya are characterized by oligopolistic kind of a market structure, and where each company devices a strategic move to attract more customers by providing satisfactory and competitive edge services. In this study, game theory which is one of the operational research modelling techniques is used to evaluate the performance of telecommunication companies in Kenya and hence, game theory plays a critical role in the study of decision optimization among multiple decision-making players that interact and compete with each other. This paper therefore sets out to analyze the competition models of Kenya two leading telecommunication companies; Safaricom and Airtel Kenya. Safaricom is the dominant player with average market share of 76.50% for mobile voice, SMS traffic, mobile broadband and mobile money while Airtel Kenya controls an average 22.23% for such services, this is based on last quarter of 2024 report by Communication Authority of Kenya. Game theory methods are applied to provide scenarios on how each company maximize profits given the strategic choice of the other, and this is achieved by studying services offered by each of these companies. Each company strives to attract customers through provision of satisfactory and competitive services. While using game theory operational methods, we will use payoff matrix, graphs and charts to analyze the performance of the two leading telecommunication the companies in Kenya. This study examines the pricing strategies for mobile voice calls, SMS traffic, mobile broadband, and mobile money, customer retention strategies, and cooperative strategies and further, provides insights into market dynamics, and potential equilibria for Safaricom and Airtel Kenya.},
keywords = {Game Theory, Telecommunication Industry, Players, Payoff Matrix, Strategic Choices, Nash-equilibrium.},
month = {April},
}