Paraphrase Essay Example | Topics and Well Written Essays - 1250 words - 1

Paraphrase - Essay Example If a firm is operating at or near capacity, it is not very likely to instigate a price war because it wants to raise its prices to increase profits. Also, a firm may not have the resources to dramatically reduce the price of a significant product. 6. â€Å"Pricing cooperation is more likely to emerge in markets where one firm raises a price and competitors follow suit and market shares remain unchanged. It is less likely to work well in markets where price matching may not leave market shares constant. Evaluate this statement. Can you think of circumstances under which price matching behavior could alter market shares? Greater prices will always benefit a company. Also, it is easier for a company to observe higher prices rather than lower prices. In this instance, the price of a good acts like an identical feature of the market. A firm that could gain a significant market share due to reducing prices would be inclined to employ price matching behavior. Firms that are perceived to produce high quality products may also think about this strategy. 7. Suppose that you were an industry analyst trying to determine whether the leading firms in the automobile manufacturing industry are playing a tit-for-tat pricing game. What real-world data would you want to examine? What would you consider to be evidence of tit-for-tat pricing? The real-world data that I would want to consider would be the advertised price for a product. To get a better understanding of the market, I would compare the current price with the last financial period. 8. Studies of pricing in the airline industry show that carriers that dominate hub airports (Delta in Atlanta, USAir in Pittsburgh, American in Dallas) tend to charge higher fares on average for flights into and out of the hub airport than other, non-dominant carriers flying in and out of the hub. What might explain this pattern of prices? First of all, carriers that