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more_study_questions_for_exam1_spring_08_ProblemSet

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1. Consider buyer and supplier power in the concentrate, bottling, and aluminum smelting industries. a. Compare the concentrate and bottling industries: Which industry faces a greater threat of hold up from suppliers (i.e. in which industry are suppliers more powerful)? b. Evaluate the following statement: “In an industry like the aluminum industry, buyer power is irrelevant.” What characteristics of the aluminum industry either make this true or false. 2. Barriers to entry and imitation a. Consider the following industries: aluminum smelting, concentrate, bottling: Did high fixed costs and the resulting economies of scale created an entry barrier in any of these industries? If so, which one? If not, why not? b. Evaluate the following statement: an industry with higher entry costs has higher entry barriers. Can you make it more accurate? c. How did Coke and Pepsi make the entry barriers higher in the concentrate industry? How did some new entrants work around the entry barriers created by Coke and Pepsi?
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