Discussion Questions
Based on the assigned scenario for Katrina's Candies, assume that now there is a significant degree of interdependence among rival firms in the candy producing market. Please respond to the following questions.
a) What market structure will Katrina's Candies operate if the above condition prevails?
b) What pricing strategy for Katrina's would you recommend under the above market structure?
(Please make sure to discuss the importance of predicting the pricing strategies of the rival firms.)
Suppose you provide consulting services on price-setting strategies to a number of airline companies. Please respond to the following questions based on the lecture concepts of this week.
a) In what way the "game theory" can be a useful optimization tool in making pricing decisions by airlines?
b) Critically discuss at least two price-setting strategies that are commonly used by airline companies and predict the impacts of such pricing methods on the demand for seats and the firm's profits.