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Coca-Cola Analysis Essay

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This is an essay to discuss the economics phenomenon with a particular product in the beverage area. Trying to analyze the relationships among the price, demand and supply and other factors in the beverage industry, such as substitute and complement products, market competitors and input prices or costs, etc. Introduction Coke refers to Coca-cola which is a dominant product of the Coca-Cola Company. There are six parts in this essay to display the market structure, factors affecting price, demand and supply, substitute and complement products, elasticity, market competitors and some factors of production of the Coke. Market structures Definition A classification system for the key characteristics of a market, including the number…show more content…
2. the kinked demand curve The kinked demand curve explains the behaviour of firms. It is a demand curve faced by oligopolies who assumes that rivals will match a price decrease but ignore a price increase. The price of the Coke is always similarity with the Pepsi and it is obvious that when the Coke makes promotion, others easy followed. 3. price leadership As mentioned before, Coca-cola is a dominant firm in this area, which means it can set the price for the carbonated beverages industry and the other firms follow. It is a pricing strategy as well. 4. the cartel It refers to a group of firms formally agreeing to control the price and the output of a product. Take the Coke and Pepsi as an example, if they become a cartel, that is mean they formally agreeing to control the price and the output of the carbonated beverage coke. Cartels are illegal in Australia and in most other developed countries. To sum up, Coke in the oligopoly market structure, because of the barriers for new competitions entry into, it can charge higher prices and earn economic profits in the long run. Substitute Products Coke owned by Coca Cola Amatil (CCA) is one of Australia’s largest food and beverage (soft drinks and juices, as well as alcoholic drinks) brand. In Australian market, the largest competitors in the beverage industry are CCA and Schweppes who hold 84%
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