Explain how in firms with market power, the price elasticity of demand can influence firms’ pricing strategies.

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Explain how in firms with market power, the price elasticity of demand can influence firms’ pricing strategies.

Q1. Explain how in firms with market power, the  price elasticity of demand can influence firms’ pricing strategies.  Discuss at least two world examples in which well-known companies applied such strategies. 

Q2. In the early 2000s Procter & Gamble Co. [p&G] launched a huge marketing campaign to promote new Crest toothpaste product, struggling to regain its market share from Colgate-Palmolive Co. The latter succeeded to achieve a larger share after it introduced its Total Advanced Fresh Toothpaste.  This battle has pushed other competitors out of the market.

Describe the strategies that these oligopolistic companies used to fight the toothpaste war.  What were the elements of success or failure?

Q3. In monopolistic competition markets the game is “continuous differentiation” to stay on top of the game; i.e., to prevent the erosion of market power .  Provide two industries that can best represent monopolistic competition; what are the main characteristics of such markets; what did specific firms within these two industries you have chosen do to differentiate their products? Did they succeed?

Q.4. Creating a “real” cost-advantage can be very challenging. What is a real cost advantage? Why it is important in the complex business environment today? And give ONE example of a firm that tried doing so through innovation and adopting cheaper technologies that are not readily available to competitors?