Carcinogens-r-us and lung decay two cigarette producers of, Finance Basics

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Carcinogens-r-us and lung decay two cigarette producers of

Carcinogens-R-Us and Lung Decay, two cigarette producers of comparable size, are struggling for market share in a declining market. CarcinogensR-Us has just undergone a leveraged buyout and is able to meet its fixed expenses with its existing market share, but it may be forced into bankruptcy if it loses market share. As a manager of Lung Decay, how would you establish your pricing policy? If Carcinogens-R-Us enters bankruptcy, it would either

(a) be forced to liquidate,

(b) lose market share because of customer concerns, or

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