Cross Price Elacity

1. Cross price eleacity Case study Jio Network
Cross price elasticitymeasuresthe responsivenessof demandforgood X followingachange inthe
price of a relatedgood Y. It couldbe notice infollowingtwoways.
• Substitutes are goodsthat can serve as replacementsforone another;whenthe price of one
increases,demandforthe othergoesup. Perfect substitutes are identical products.
• Complements are goods that“go together”;adecrease inthe price of one resultsinan increase
indemandfor the other,andvice versa.
Jio Cross price eleacity for subdtitutes
WhenJiodecreasedthe pricesof call ratesthe demandforothernetworkswentdown :
Jio is hurting the balance sheets of other telecom companies.
Airtel sawa 4.9% decline initsQ2 profitfollowingthe operatorslashingdatatariffs.Evenwithadecline
inprofit,Airtel betteredanalysts’expectations,witha24% increase indata revenue,butitsrival Idea
wasn’tso luckyandactuallysawits data revenue declinebymore than19%. Some unconfirmednews
reportssay that althoughthe existingoperatorsdonotwantto make theirvoice callstotallyfree,they
couldmake callsmade overthe VoLTEnetworkstheywill roll outinfuture free.Thiscouldhurttheir
marginsfurther.
Anothernewstell howjioisdecliningthe demandof substitutes.
IdeaCellularLtd,a part of the AdityaBirlaGroup, andVodafone GroupPlc.’sIndianunitsaidon21
March that theyhaddecidedtomerge ina $23-billiondeal tocreate the world’ssecondlargestand
India’slargesttelecomcompanybasicreasonof theirmergerwastoplaydownJiofactor . It apparantly
showsthat othercompaniesprofitsare decliningwhichultimatelyshow thatdemandof theirnetwokis
declningafterjiocame inthe market.

2. Jio Cross price eleacity for complements
CitingmarketresearchfirmCounterpointTechnology,the reportsaidthat80% of LTE compatible
smartphonesshippedduringthe July-Septemberquarter(Q3) were VoLTEenabled,ascomparedto 63%
inQ2 and 30% in Q1. It furthersaidthat 90% of all LTE (4G) enabledphonestobe shippedintoIndiaby
the firsthalf of 2017 will use VoLTEtechnology.AccordingtoCounterpoint,Samsung,Lyf,Lenovoand
Xiaomi are amongthe leadingbrandsinthe VoLTEcategory.Thiseffectivelymeansthatgoingforward,
VoLTE will become the defaultbasicminimumsmartphonetechnologyinthe country.

3. Refrences :
(https://www.vccircle.com/six-ways-which-reliance-jio-may-have-changed-indias-telecom-landscape/)
Schaum`sotline series3rd
editionMicroEconomics