QUESTION $4$

$(25$ Marks$)$

CASE STUDY: WHAT WENT RIGHT AT INTERLINK SURGICAL STEEL AND GILLETTE?

In the $1980$ s and early $1990$ s$,$ Interlink sold replacement hypodermic syringes by the thousands

to hospitals for $10$ cents per syringe. Each time a catheter was changed, a new hypodermic

syringe would be inserted into the patient's vein. A Japanese surqical steel company entered

the market with an identical product for $3$ cents each. Interlink promptly introduced a

replacement device that only needs insertion one time; that is$,$ any new saline or pharmaceutical

drip lines can be hooked directly to an interlink syringe device that need not be removed and

replaced. This new process reduces the risk of patient infection and the inherent hazard to

the nursing staff of exposure to patient blood. Interlink again dominates the market, and prices

have stahilized at higher levels than before.

Similarly, Gillette Co$.$ responded to a four$-$bladed new product intraduction of Quattro by

Schick$-$ Wilkinson Sword. Quattro had stolen $3$ percent of Gillette's $83$ percent market share in

the men's razor market. Instead of an ongoing parade of discounts, coupons, and promotions,

Gillette rolled out its own innovation: a battery$-$powered vihrating razor called Mach$3$Power.

M$3$Power improves the closeness and longevity of the shave by exciting chin hairs to push up

out of their follicles. The new product costs two$-$thirds more than the Gillette Mach$3$Turbo it

replaced, and replacement cartridges are $20$ per cent higher$-$priced

Source : Based on "How to Fight a Price War", Harvard Business Review $($March$/$April $2021)$;

"How to Escape a Price War", Fortune $($June $13,2022)$ and "Gillette to Lunch", Wall Street

Journal$($January $16,2023).$

With an appropriate diagram, critically discuss why is the telecommunication companies firm's

is kinked demand curve in the market?. Identify the FIVE $(5)$ factors affecting the likelihood of

successful collusion in this market structure.

$(25$ marks$)$