Cambridge College

Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part IV. Pricing strategies and market segmentation Exercises Exercise 1 Geographical pricing [included in 2nd edition of the book] "Purple Dream"has the monopoly on the production of purple light-emitting diodes (LEDs). It faces geographically separated markets, market 1 and 2. The demands are qA = 1 pA and qB = 1=2 pB, respectively. The transport and production...

Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part III. Sources of Market Power Exercises & Solutions Exercise 1 Horizontal product di§erentiation1 [included in 2nd edition of the book] Hong Kong Island features steep, hilly terrain, as well as hot and humid weather. Travelling up and down the slopes therefore causes problems; this has led the city authorities to imagine rather unusual methods of transport. On...

Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part V. Product quality and information Exercises Exercise 1 Lemons problem Consider the following version of the lemons problem. There is a continuum of buyers and sellers in the market; the total mass of each group is 1. Each seller has one car to sell and each buyer wishes to buy at most one car, but only sellers know the quality of their cars before trading. It i...

Exercise 1 Industries with cartels Brieáy describe and analyze a case of your choice concerning a price- or quantity-Öxing cartel (please not OPEC). The following questions may be useful to bear in mind: What are the relevant characteristics of the industry? What was the scope of the cartel? How was the cartel enforced? What were the e§ects of the cartels? How did the competition authority or court argue and what was the decision, if any? Exercise 2 Collusion and pricing Two (advertis...

Exercise 1 Geographical pricing [included in 2nd edition of the book] "Purple Dream"has the monopoly on the production of purple light-emitting diodes (LEDs). It faces geographically separated markets, market 1 and 2. The demands are qA = 1 pA and qB = 1=2 pB, respectively. The transport and production costs are set to zero. 1. Assume that the Örm chooses to set a uniform price across the two markets. What is the proÖt maximizing uniform price? What are the quantities sold on the tw...

Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part III. Sources of Market Power Exercises & Solutions Exercise 1 Horizontal product di§erentiation1 [included in 2nd edition of the book] Hong Kong Island features steep, hilly terrain, as well as hot and humid weather. Travelling up and down the slopes therefore causes problems; this has led the city authorities to imagine rather unusual methods of transport. On...

How would you evaluate Paul Polman’s 2010 decision to implement a new strategy based on the Unilever Sustainable Living Plan (USLP)? What benefits did it offer? What risks did it present? Gary Hamel and C.K.Prahalad proposed a framework called the Core-Competence Market Matrix ( depicted in the picture above ) In my view, Paul Polman’s basic objective of implementing this new strategy based on USLP was to create a new set of core competence, which would be rare and not easy to copy. Th...

How would you evaluate Paul Polman’s 2010 decision to implement a new strategy based on the Unilever Sustainable Living Plan (USLP)? What benefits did it offer? What risks did it present? Gary Hamel and C.K.Prahalad proposed a framework called the Core-Competence Market Matrix ( depicted in the picture above ) In my view, Paul Polman’s basic objective of implementing this new strategy based on USLP was to create a new set of core competence, which would be rare and not easy to copy. Th...

Consider the following version of the lemons problem. There is a continuum of buyers and sellers in the market; the total mass of each group is 1. Each seller has one car to sell and each buyer wishes to buy at most one car, but only sellers know the quality of their cars before trading. It is common knowledge however that the quality of cars, denoted s, is drawn from a uniform distribution on the interval [0; 1] (hence, the probability that a carís quality is below some number x is equal...

Exercise 1 Industries with cartels Brieáy describe and analyze a case of your choice concerning a price- or quantity-Öxing cartel (please not OPEC). The following questions may be useful to bear in mind: What are the relevant characteristics of the industry? What was the scope of the cartel? How was the cartel enforced? What were the e§ects of the cartels? How did the competition authority or court argue and what was the decision, if any? Exercise 2 Collusion and pricing Two (advertis...