Industrial Paper

Essay by TRINA30University, Master's November 2007

download word file, 4 pages 2.2

Industrial Organization Paper � PAGE \* MERGEFORMAT �2�

Running head: Industrial Organization

Industrial Organization Paper

Katrina Brown

University of Phoenix

Craig Martin, PhD

October 18, 2007

Industrial Organization Paper

The paper focuses on the pricing and non-pricing strategies in use by Quasar Computer. The paper explains how the computer industry evolved throughout the four market structures over the lifecycle of the product. In addition, the paper describes changes in the aggregate number of suppliers and consumers.

Quasar Computers launched the world's first optical notebook labeled "Neutron." The company had to decide the pricing strategies that will maximize Quasar's profits. Quasar was a pure monopoly at the time of launching. Pure monopoly exists when a single company is the only creator of a product for which there no close substitutes (McConnell, Brue, 2004). Odds of economic profit are better for a pure monopolist than for a pure competitor. The pure competitor is fated to have only a standard profit, whereas blockades to entrance signify that any economic profit recognized by the monopolist can continue.

In pure monopoly no new participants to increase supply, drive down price, and eliminate economic profit. As the CEO, I set the price for the notebook to $2,150. The quantity of units were 6.4 million, which left a profit of .87 billion dollars. Time went on and decision needed to be made about advertising expense. Decisions had to be made about how much to spend on advertising while the companies were still a pure monopoly company. Monopolistic competitors advertise their products, often heavily. The goal of product differentiation and advertising so-called nonprice competition is to make price less of a factor in consumer purchases and make product differences a greater factor. The decision made by the team, was to invest $500 million in advertising while...