Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 15, Problem 7QE
(a)
To determine
Find the Herfindahl and four-firm concentration ratios for the industries.
(b)
To determine
The industry suggested by an individual in the court if the individual were the Mattel’s economist.
(c)
To determine
Decreased competition using the merger.
(d)
To determine
Increased competition result from the merger.
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Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is among the worldwide leaders in the lemon-lime soft drink market and ranks in the top 10 among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemon-lime soft drink, PepsiCo would continue to earn a $200 million profit, and Coca-Cola would continue to earn a $300 million profit.
Suppose that by introducing a new lemon-lime soft drink, one of two possible strategies could be pursued:
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Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is the worldwide leader in the lemon-lime soft drink market and ranks fourth among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemon-lime drink, PepsiCo would continue to earn a $200 million profit and Coca-Cola would continue to earn a $300 million profit.
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In 1983, Motorola accounted for seventy five percent of the mobile phone market. But by 2019, its market share had shrunk to just 2.2%. In 1983, the Motorola launched one of the world’s first commercially available mobile phones—the DynaTAC 8000X. Motorola went on to launch a few more devices over the next few years and quickly became a dominant player in the emerging industry. In the early days of the market, the company’s only serious competitor was Finnish multinational Nokia. By the mid-1990s, other competitors like Sony and Siemens started to gain some solid footing, which chipped away at Motorola’s dominance. In September 1995, the company’s market share was down to 32.1%. By January 1999, Nokia surpassed Motorola as the leading mobile phone manufacturer, accounting for 21.4% of global market share. That put it just slightly ahead of Motorola’s 20.8%.
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Chapter 15 Solutions
Microeconomics
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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