Question 2The nuts industry has a history of being highly concentrated. In 1980, the four largestfirms controlled much of the market share. Plonters led the industry with a 28% marketshare, followed by HT Foods at 26%, Panamanian Nuts at 23%, and Toatsi at 22%. A priceincrease by one firm was typically matched by price hikes from the others. Each year, thebig four firms heavily advertised and distributed millions of coupons to promoteconsumer loyalty.In 2004, HT Foods acquires Panamanian Nuts and Toatsi which resulted in skyrocketingprices. Many consumers complained about inflated prices and investigations wereconducted by the authorities. i. State what market structure exists in the nuts industry during the 1980s. Canexcess profit be earned in this industry in the long run. Explain. ii. State what market structure exists in since the early 2004. Explain if excess profitwill exist in the long run. iii. Illustrate and explain how equilibrium is determined in the nuts industry since2004. iv. Are the firms in the industry operating efficiently in (i) the 1980s; and (ii)presently? Explain. v. Provide an explain one (1) strategy that the authorities can implement to curbprices in the nuts market.
Question 2
The nuts industry has a history of being highly concentrated. In 1980, the four largest
firms controlled much of the market share. Plonters led the industry with a 28% market
share, followed by HT Foods at 26%, Panamanian Nuts at 23%, and Toatsi at 22%. A price
increase by one firm was typically matched by price hikes from the others. Each year, the
big four firms heavily advertised and distributed millions of coupons to promote
consumer loyalty.
In 2004, HT Foods acquires Panamanian Nuts and Toatsi which resulted in skyrocketing
prices. Many consumers complained about inflated prices and investigations were
conducted by the authorities.
i. State what market structure exists in the nuts industry during the 1980s. Can
excess profit be earned in this industry in the long run. Explain.
ii. State what market structure exists in since the early 2004. Explain if excess profit
will exist in the long run.
iii. Illustrate and explain how equilibrium is determined in the nuts industry since
2004.
iv. Are the firms in the industry operating efficiently in (i) the 1980s; and (ii)
presently? Explain.
v. Provide an explain one (1) strategy that the authorities can implement to curb
prices in the nuts market.
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