Oligopoly-Coca cola & Pepsi

Oligopoly is defined as an industry that involve of a few of large firms competing with each other. Both of these brands are legendary brand rivalry. Coca cola and Pepsi are belongs to the oligopoly market so they are selling homogeneous products so they can control over the price but it is mutual interdependence. They need to consider the action of rival because both of these two brands are perfectly close substitutes and the demand curve of other products will affected by each other.

These two brands are using the same pricing strategy that is low-price strategy to maximize the market profits. Both of them will use cut-throat price competition to increase their profits during summer holidays. Furthermore, they have to sign a cartel agreement to set a high barriers to avoid other firm enter this market. Their profits will roughly equal by the other small firms then the economic profits of both of these firms will diminished. 

Advertising wars of Coca cola and Pepsi

Pepsi and coca cola are the world’s top 100 brand with research by the report of “Interbrand” 2012.

Reference

Nataraj Pangal., 2010. Price War Analysis – Coke Pepsi [online] available at: http://www.slideshare.net/natarajpangal/price-war-analysis-coke-pepsi

By = Wong Teck Sheng