In 2006, the five leading suppliers of digital cameras in the United States were Canon,

Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms

was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The

own price elasticity for Canon's cameras was -4.0 and the market elasticity of demand

was -1.6. Suppose that in 2006, the average retail price of a Canon digital camera was

$240 and that Canon's marginal cost was $180 per camera.

Based on the above information, discuss industry concentration, demand and market conditions,

and the pricing behavior of Canon in 2006 and explain how the industry environment

significantly influence the performance of the digital camera firms.