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Market Power of Business.docx

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Western University
Political Science
Political Science 2211E
Adam Harmes

Market Power of Business Monday, March 26, 2012 3:36 PM 1. The Market Power of Retail Firms  Retail revolution  Rise of chain stores, big box stores and category killers o Category killer: specialized in particular product category (ToysRus, Chapters, etc) o Big Box: Wal-Mart, home depot  Shift away from department stores and indy stores Economies of scale and brand power  Market Power  Company's power over supplies, competitors, customers and other stakeholders  Separate from lobbying power and exit power Benefits of Market Power  Lower prices and better service due to: o Economies of scale o Bulk buying o Standardization and efficiency o Consumer trust Concerns Over of Market Power  Dumping and predatory pricing o Selling below  Puts independent stores out of business  Hollows out downtowns  Homogenizes small towns  Clustering o Opening more stores than an area can support o Too litter business per store drives independents out of business  Bundling o Selling less popular products bundled with more popular o Microsoft Windows and Explorer bundled together to drive Netscape out of business - which they did.  Exclusivity Agreements o Force supplier not to sell to competitors o Force retailer not to sell competitor's products o York University:  Pepsi signed and exclusivity agreement with York  Pepsi didn’t sell orange juice so for 3 years you couldn’t buy orange juice on York Campus  Corporate Sponsorship of Public Institutions o Ads and product placement in schools o Non-disparagement clauses and censorship  You cannot say bad things about the company  Oliverie case: scientist at UofT doing research on a drug, she found problems with a company, and that company tired to sue her for breaching the non- disparagement clause  University of Wisconsin and Rebook: not allowed to voice your opinion about dissatisfaction of reebok 2. The Market Power of Hedge Funds  Unregulated mutual funds for wealthy investors  Able to do things othe
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