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Price fixing in detergent industry

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a) Identify and explain the key features of an oligopolistic industry. Illustrate your answer with reference to an industry of your choice.

b) Examine the case of price fixing within the detergent industry. Examine and evaluate why price fixing would be likely to occur in this industry and explain the economic rationale behind the decision not to fine Henkel.

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a) Identify and explain the key features of an oligopolistic industry. Illustrate your answer with reference to an industry of your choice.
The important features of an oligopolistic industry are there is a small number of sellers, they are aware of the actions of other and decision of one firm is influenced by actions of other firms. Other important features are that there can be long term profits, there is knowledge about what the competition is doing, they have the ability to set prices, high entry/exit barriers, and profit maximization. Since the oligopoly firms have the ability to set prices, the action taken by others is considered when setting prices. One industry where there is oligopoly is that of steel. There are high entry/exit barriers because the investment required is high. There are few firms that make steel and each ...

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Assistance

I need assistance writing a business proposal. I have to select a new and realistic good or service for an existing industry. I need to write the economic analysis section of a business proposal. This will include statements about the market structure and the elasticity of demand for the good or service, based on text book principles. I need to create hypothetical data, based on similar real world products to estimate fixed and variable costs.

Discuss the following:
Identify market structure
Identify elasticity of the product

Include rationale for the following questions:
How will pricing relate to elasticity of your product?
How will changes in the quantity supplied as a result of your pricing decisions affect marginal cost and marginal revenue?
Besides your pricing decisions, what are your suggested non-pricing strategies? What non-pricing strategies will you use to increase barriers to entry?
How could changes in your business operations alter the mix of fixed and variable costs in line with your strategy?

Please see the attached file for a business proposal checklist.

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