price cut for medicine

medicines

1. What kind of market structure is involved for the sale of medicines and vitamins?

2. What can be said about barriers to entry in this market?

3. Might there be a change in market structure after the change in the law?

4. Explain the disadvantages of the abolition of resale price maintenance (RPM) for this market?

a)

May compromise on the quality of product. Customer can get quality of the product or

the value for their money

b)

Consumer might be overcharged

c)

Would be increased competition on prices of medicines and vitamin.

5. When RPM was abolished for book sales in 1995, the same concerns as those expressed in

the above case were voiced. Since then, 10 per cent of bookshops have gone out of business.