Question

Question: The small upstate town of Geneva has 10 burger shops whose respective shares of the local hamburg...

The small upstate town of Geneva has 10 burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 22%, 20%, 14%, 12%, 10%, 8%, 5%, 4%, 3%, and 2%.

1. Based upon your classification of the market structure of Geneva's hamburger industry, how would you predict that these companies will behave (compete):
   1. What kind of price competition might you observe from these firms?
   2. What kind of non-price competition might you observe from these firms?
2. What non-quantitative [qualitative] factors might you weigh in deciding to approve or reject the merger?

Answer 1

ANS: Given,

There are ten Burger shops in Geneva town with respective percentage shares sold at local Hamburger market are as follows:

A=22%, B=20%, C=14%,D=12%, D=10%, E=8%, F=5%,G=4%,H=3%,I=2%

PRICE COMPETITION: Here the competitors set same or low price of the commodity so that more market share is gained and demand regarding the product increases.

NON-PRICE COMPETITION: Here the competitors generally don't give importance on lowering the price, rather they give more importance on the packaging, design, outer look of the product.

Here from the percentage shares of these 10 firms, we can observe that these firms have not given much importance on price competition and non-price competition as their shares are less. For this we may reject the merger.