Question

• Jay Corporation, the largest manufacturer of bicycles in the United States with 40 percent of the market, has recently entered into an agreement with Retail Bike, the largest retailer or bicycles in the United States with 37 percent of the market, under which Jay will furnish its bicycles only to Retail, and Retail will sell only Jay's bicycles. The government is now questioning this agreement.
• Retail Bikes created a new buying option that anyone who buys a bike must also buy a pair of padded Retail Bikes-brand bicycle shorts.
• Retail Bikes opened a new mountain bike shop next to Mom & Pop Cycles, a small local bike shop that sells only mountain bikes. During their grand opening sale,Retail bikes slashed prices of their road bikes, but not their mountain bikes by 50%.

Answer 1

Here Retail Bike a largest retailer entering an agreement with Jay corporation a largest manufacturer of bicycles. That the biggest retailer will furnish Jay bicycle only. But Government questioned. They find another method to improve selling Jay's bicycles.

The reason for slashing prices of road bikes is that another shop Mom & Pop who sells Cycles and Retail Bike's buying option is to sell bicycle shorts with bike that will increase the sale of bicycles and indirectly this will benefit Jay corporation. Who buying bike will also impressed to buy bicycle especially there is a bicycle shop near by. There is no impact on selling Mountain bike with bicycle selling. This is an indirect move as the government questions the direct move.