You are the country manager of a firm that produces and markets a generic type of soft drink in a competitive market in Ghana. In addition to the large number of generic products in your market, you also compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for your product. In addition, Coke and Pepsi launches an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the market outcomes of generic soft drinks if effect of the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft drink?
You are the country manager of a firm that produces and markets a generic type of soft
drink in a competitive market in Ghana. In addition to the large number of generic products
in your market, you also compete against major brands such as Coca-Cola and Pepsi.
Suppose that, due to the successful lobbying efforts of sugar producers in Ghana,
Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for
your product. In addition, Coke and Pepsi launches an aggressive advertising campaign
designed to persuade consumers that their branded products are superior to generic soft
drinks. How will these events impact the market outcomes of generic soft drinks if effect of
the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft
drink?
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