Burton Turner and Short Whittum live in a small town in western Manitoba. They both own gas stations and provide gasoline and engine repair services for the area. The town is somewhat isolated, and during the winter it is sometimes difficult to travel to other towns in the surrounding area.
While having coffee one morning, Turner and Whittum discuss the prices they charge for gasoline and for repair services. They decide that it would be a good policy if they both set the same prices because then customers would choose between the two businesses based on the quality of service and the brand name of the gasoline.
REQUIRED
A. What pricing alternatives are available to Turner and Whittum for setting prices? List as many alternatives as you can.
B. Is this an open-ended problem? Why or why not?
C. Explore this problem from the perspectives of
1. Turner and Whittum
2. Customers
3. Government officials
D. Compare and contrast the legal and ethical issues in this situation. How are they the same? How are they different?
E. Ignoring possible legal issues, is the proposed pricing policy of Turner and Whittum ethical? Why or why not?
F. Suppose you are a government official, and you receive an anonymous phone call, telling you that Turner and Whittum are charging the same prices for gasoline and repair services. How might you monitor the two businesses to determine whether their actions are illegal?