Four years ago, Mattel Inc. exhorted its executives to help save Barbie from a new doll clique called the Bratz. With its market share dropping at a “chilling rate,” Barbie needed to be more “aggressive, revolutionary, and ruthless.” Mattel has gone to court and is trying to seize ownership of the Bratz line, which Mattel accuses of stealing the idea for the pouty-lipped dolls with the big heads.
a. Before Bratz entered the market, what type of monopoly did Mattel Inc. possess in the market for “the pouty-lipped dolls with the big heads”?
b. What is the barrier to entry that Mattel might argue should protect it from competition in the market for Barbie dolls?
c. Explain how the entry of Bratz dolls might be expected to change the demand for Barbie dolls.