This memo will focus on identifying which oligopoly model best fits the local tuna fishing industry, calculating profits in the industry, and recommending the best strategy to for the firm to improve profitability through an acquisition.

Dear Phil,

We have been providing bluefin tuna in the lower Naples port for the last 25 years. People just love sushi here.

Our competition, Naver Fish Co. and only license holder for the market, has been increasing their capacity by lowering their daily cost to mimic our cost of C(Q) = 36000 + 33q, and forcing us to lower our price to $300/lb. We estimate that the market demand from the local sushi bars is about P = 900 0.1Q, and is dependent on how much all boats bring in. Right now, we are not sure if we are optimizing our fishing operations. Can you check to see if we are bringing in the right amount to the market and getting the best price?

We have been exploring an option to get to the market earlier. This would require renting a higher power motor, reserving a slot in the dock, and higher fuel costs. All of this would add an extra $52,000 to our fixed cost, but we could establish our catch before Naver. I am just not sure if it is worth it.

Speaking of worth it. I am considering buying Navers license. Their CEO said they would take the equivalent of $800k/day. Of course, then we would not have to invest in the early market strategy cost.