Econ presentation - Market allocation

1. Econ presentation- Market allocation Mandy Cheng (5) Nonie Cheng (6)

2. News Summary • Golf Galaxy: operating a chain of U.S.-based golf superstores that offers a wide range of merchandise and related services • Golf Canada: operating a chain of similar stores in Canada

4. Identify the type of anti-competitive behaviours • Market allocation/market division • Meaning: Under an agreement of market allocation, the competitors in a market form a cartel and agree to divide the market into territories. • Horizontal agreement - an agreement among competitors in the same market to restrict competition • Golf Galaxy and Golf Canada are competitors in the same golf market • Dividing the market into territories:Golf Galaxy - the US Golf Canada – Canada • Restricted competition  market allocation.

5. Effects of market allocation For the Golf Galaxy & Golf Canada: • More promotionsMonopoly rights sell products in Canada and United States Capture all the benefits from product promotion • Less competition May become monopolists in Canada and United States price searcher  raise price easily &earn monopoly profit

6. For golf merchandise industry • Less competitive no power in the market • Hard to enter the industry market is being monopolized Entry is restricted

7. For Consumers: • Unfair market is monopolized Less Choices  More expensive

8. For Society: • Two companies set a higher price earn the monopoly profit capture some of the consumer surplus MB>MC Underproduction of output Deadweight loss TSS Inefficiency in resource allocation in society

9. ~~~The End~~~