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Biotech / Medical : VISX
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To: Charlie Smith who wrote (1692)3/1/2000 8:55:00 AM
From: nihil  Read Replies (2) of 1754
 
A deep pocket with a comparable product trying to enter monopolized market should price to maximize joint profits (price equal to the monopolist at the combined output where the (identical) marginal costs cut the marginal revenues). It is dangerous for the entering firm (BOL) to initiate a price war (unless it has both a production cost advantage and a quality differential. To gain market share, BOL should concentrate on quality issues, advertising, and product differentiation -- not price. I don't think there is much danger of BOL engaging in destructive price cutting. except in response to mistaken VISX initiatives. These are simply the rules of accommodating duopoly or straight-forward game theory.
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