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The Soft Drink Industry as a Type of an Oligopoly

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Use the Internet to research an oligopoly. Describe the oligopoly you researched and explain what makes it so.

Assume that a very competitive start-up enters the market in direct competition with the oligopoly you described, initially gaining a 12% market share. Discuss the steps the oligopoly should take to address this new competition.

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The solution discusses the soft drink industry as a type of an oligopoly.

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The soft drink industry is a type of an oligopoly and an example of the firm is Coca cola Company. The industry is an oligopoly because the firms in this industry produce products that are differentiated. The competition depends on the way the brand of the firms market their products. The firms in the soft drink industry are mutually interdependent and each firm is affected by the actions of the competitors. The sales of Coca Cola Company may end up being affected in case Pepsi changes its product specification or even the price of the product. The competitors often act by changing their advertising, specification and price. There are also barriers to entry of new firms in the soft drink industry (Profit maximization under imperfect competition, 2010).

Steps the oligopoly should ...

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