ECON301-2

The following two tables apply to all problem sets:

Table#1: Market Share in U.S. Chocolate Bar Market of Major Chocolate Bar Companies (2020)
Company	Market Share (% of US Market)
Hershey	43.3%
Mars	29.8%
Lindt/Ghirardilli /R. Stove	9.1%
Ferrero*	7.0%
All others	10.8%

*Nestle sold its U.S. chocolate business to Ferrero

To simply matters assume that each chocolate bar company has a single chocolate bar marketed in the USA as noted below:

Table#2: Representative Chocolate Bar Prices (2020)
Company	Name of Chocolate Bar	Price ($ per unit)
Hershey	Hersheys Chocolate	0.88
Mars	Snickers	1.25
Lindt/Ghirardilli /R. Stove	Dark Chocolate Cacao 90%	4.33
Ferrero	Kinder Chocolate	2.79

In the promotion that is offered for the CD Rockin Shoes, assume that the number of CDs sent out to customers equals 487,124 and the royalty percentage is 9.5%. Each customer is to put inside an envelope a stamped self-addressed envelope with sufficient postage for a CD plus other content as described below:

Ferrero Company is offering a promotion to its customers. Send the company one dollar plus 5 wrappers of any companys chocolate bar and the company collects $487,124 from its customers.

1. How much does this chocolate company maintain it has to pay Chappell, the copyright holder of Rockin shoes? Show your calculations. [A1/B1] (3 marks)
2. How much does Chappell maintain that it must be paid in copyright royalties? Show your calculations? [A1/B1/C1] (4 marks)
3. Based on the precedent of Chappell v Nestle, what level of royalties would a judge, under these circumstances, mandate that the chocolate company pay Chappell? Briefly explain. (maximum 25 words) [C2] (3 marks)