COMPETITION AND MARKET POWER

Competition and Market Power

Competition and Market Power

1. Firms in Competitive Markets

The official "Incredible Edible Egg" Web Site: Go to: http://www.aeb.org/. This website is sponsored by the American Egg Board. Among other things, the site is clearly an advertisement for the egg industry. Have you ever seen or do you expect to see advertising for individual egg producers? What characteristics of the good make the market competitive? Technology firms typically do not follow consumer wants and needs but create them because there is no conceptual understanding in the marketplace when they develop and introduce new products.

In addition to some very clever and hard-nosed approaches to marketing, American Egg Board also utilized some forward and very unusual thought processes to arrive at new approaches that often effectively changed many traditions and expectations. One could argue that American Egg Board has been successful because it remained focused on what would be best for themselves and the consumer rather than merely responding. American Egg Board took some existing concepts and looked way out on the horizon to identify some possibilities that were literally beyond the horizon. However, in the future, given the public knowledge of their actions, and constant media scrutiny, American Egg Board and other similar firms are unlikely to achieve as many competitive marketing advantages as in the past.

2. Monopoly

Diamonds: Go to http://www.debeers.com/. Does a monopoly firm produce this product? Explain. What characteristics of the good make the market monopolistic? De Beers is currently being faced with some new challenges that are making it necessary for us to consider a change in the way we do enterprise. With current chaos in Western Africa, where unlawful diamonds are opening to come from war torn villages, and additional sources of diamonds being set up in Russia in addition to Australia, it is obvious that we require to start on to shift into the U.S. market.

However, officially, De Beers is in infringement of the U.S. antitrust laws and is consequently being forbidden from selling unswervingly in the U.S. market. All through the subsequent memo I will recognize the evils we at De Beers are at present facing. I will then make a set of recommendations for action to help us move into the U.S. market by proposing a relaxation of U.S. antitrust laws with restrictions on illicit diamonds, and finally I will conclude with some implementation steps for the solutions that have ...