Question
Ben Baskin (BB) and Jerry Robbins (JR) are the two leading ice cream restaurant chains in the US. Since this market has few firms and
Ben Baskin (BB) and Jerry Robbins (JR) are the two leading ice cream restaurant chains in the US. Since this market has few firms and both are focused on long run profitability, it is likely that BB and JR may attempt to engage in tacit collusion. Consider the impact of each of the following potential changes to the ice cream market on the effectiveness of any tacit collusion strategy involving BB and JR. Problem 6a) (5 points) American Ice Cream Producer Association issues a recommendation that all ice cream shops list their restaurants' prices online. Ben Baskin and Jerry Robbins have historically only displayed prices on in-store menus, but they follow the recommendation. Problem 6b) (5 points) A marketing consultant advises Ben Baskin to offer a discount for Independence Day, in an attempt to build a more patriotic image. Problem 6c) (5 points) A major competitor in the European market, Haagen Creamery, experiences a severe consumer backlash after a scandal involving milk with an elevated level of Insulin-Like Growth Factor 1 (IGF-1) and goes bankrupt, leaving BB and JR as the two major ice cream restaurant chains in Europe as well as the US. Problem d)(5 points) Jerry Robbins (the person) is discovered to have defrauded Jerry Robbins (the company) of millions of dollars, putting that company at risk of going bankrupt in the next financial year.
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