Koji Incorporated produces high-end cameras. Its typical camera comes with an array of options. The company has a good brand name. a. Koji distributes its cameras through independent dealers who are given exclusive distribution rights for their respective market areas. Discuss why it might make economic sense for Koji to grant its distributors exclusive territories. Company-K is operating in a monopoly market. It is the sole producer of the high-end camera. By giving special selling rights, it can ensure that there is least competition among its dealers, so that they can charge their retailer’s price in a monopolistic way. This will ensure more profit for them than the scenario when their selling rights were not given.b. Since Koji adopted this distribution system, it has experienced a double markup problem. What is a double markup problem? When a monopolist sells a product, its price is set above the marginal cost(MC). This is like setting a markup over the MC. Here, when the dealers have their selling rights, they will behave as monopolistic firms in their own region. In the first place, company-K is behaving as a monopoly and charges a markup above its MC. Again the dealers act as monopoly in their areas and charge another markup over the MC. This is the problem of double-markup.c. Discuss how Koji might use a two-part pricing scheme to reduce the double markup problem. (Be sure to specify what the two-part pricing scheme would entail.) To reduce double-markup, company-K can charge a per unit wholesale price w, which is equal to the marginal cost company-K and then it can charge a fixed fee( known as Franchise Fee) which will be equal to the profit that the dealers were making. This fixed charge will not affect the decision of the dealers and thus the double-markup problem can be solved. d. Describe one other method that Koji might use to address the double markup problem. ????ANSWER D PLEASE.

Question

Koji Incorporated produces high-end cameras. Its typical camera comes with an array of options. The company has a good brand name. a. Koji distributes its cameras through independent dealers who are given exclusive distribution rights for their respective market areas. Discuss why it might make economic sense for Koji to grant its distributors exclusive territories. Company-K is operating in a monopoly market. It is the sole producer of the high-end camera. By giving special selling rights, it can ensure that there is least competition among its dealers, so that they can charge their retailer’s price in a monopolistic way. This will ensure more profit for them than the scenario when their selling rights were not given.b. Since Koji adopted this distribution system, it has experienced a double markup problem. What is a double markup problem? When a monopolist sells a product, its price is set above the marginal cost(MC). This is like setting a markup over the MC. Here, when the dealers have their selling rights, they will behave as monopolistic firms in their own region. In the first place, company-K is behaving as a monopoly and charges a markup above its MC. Again the dealers act as monopoly in their areas and charge another markup over the MC. This is the problem of double-markup.c. Discuss how Koji might use a two-part pricing scheme to reduce the double markup problem. (Be sure to specify what the two-part pricing scheme would entail.) To reduce double-markup, company-K can charge a per unit wholesale price w, which is equal to the marginal cost company-K and then it can charge a fixed fee( known as Franchise Fee) which will be equal to the profit that the dealers were making. This fixed charge will not affect the decision of the dealers and thus the double-markup problem can be solved. d. Describe one other method that Koji might use to address the double markup problem. ????ANSWER D PLEASE.

Accepted Answer

Double markup: When assembling and dissemination is embraced by two progressive syndications, each…