Review the business proposal submitted by other Learning Team Essay

Review the business proposal submitted by other Learning Team - Essay Example This statement is apparently used to remove the idea of the tacit collusion that is generally associated with price leadership in oligopolistic markets. The paper also assumes applicability of the Kinked demand curve model for this case. The paper states that the Chrysler Group LLC’s revenue can be increased by escalating the efficiency of its operations and the quality of its products, services, and marketing strategies. This is a generic statement that needs to be elaborated. Secondly, the paper assumed applicability of the Kinked demand curve which argues that where a â€Å"kink† does exist then a marginal change in cost structure or marginal change in revenue structure will not be immediately reflected in a new quantities sold or price for the given item. The paper does not use the Kinked demand curve model in its argument. It is true that in oligopolistic markets firms have mutual interdependence. Also, a major downside of using the Kinked demand curve model is that the model does not show us what causes a new equilibrium price and quantity to be achieved, and how that happens. Nevertheless, we disagree with the paper’s analysis that because of the above two reasons, the company cannot determine the price and output level for which it can maximize its profit. The paper could have used other models such as the Cournot-Nash model that looks at firms competing on the basis of quantity. The paper therefore does not clearly state its way to establish the profit maximization quantity. The automobile industry is a typical example of a differentiated oligopolistic market. Naturally, this would mean firms have to compete on their products differentiated attributes. The author’s example of the Pentastar V6 engine illustrates this. Patenting the Pentastar V6 engine is a great example of creating an entry barrier to firms seeking to enter the market. These firms will be forced to invest heavily in Research and Development in order to come up with