Casino Inc produces and sells a low-calorie artificial sweetener called Spartan that is a substitute for sugar.
Question:
Casino Inc produces and sells a low-calorie artificial sweetener called Spartan that is a substitute for sugar. Casino’s Spartan has about 90 percent of the market. It thinks that it can get 100 percent of the market if it reduces its prices for about six months to $5 per kilogram, a price close to its cost of production. Its main competitor, Asoh Inc, has higher costs and will not be able to compete by selling its product at that price. Casino thinks that Asoh will have to go out of business or stop selling its sweetener if Casino adopts this temporary low-pricing policy. Selling at that price will significantly limit Casino’s profits, but Casino is confident that it can more than recover those lost profits by raising its prices after Asoh has left the market. Is this a rational strategy? Is it legal?
Step by Step Answer:
Managing the Law The Legal Aspects of Doing Business
ISBN: 978-0132164429
4th edition
Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer