Question 1 - Long Run and Short Run Market Share

Assume there are two companies in the region, A and B. Both companies service the entire market and have a combined market share of 100%. At the start of the period, A and B split the market evenly with 50% share each. However, A has adopted a new customer retention tool and has projected the following switching matrix.

\fIncome Low Middle High Total Shopping Location Outlet Mall Regular Mall 30 20 55 45 35 15 120 80 Total 50 100 50 200 \f\f