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Product differentiation

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Task: Choose a product, firm, industry, or market that you are interested in, and analyze it using the models and tools that we have studied throughout the semester. In particular, discuss the following: • Briefly describe the topic you have chosen (e.g. the product/firm/industry/market) • Discuss how this topic fits into one of the models we have studied (e.g. how well does it fit the assumptions of the model?) • Analyze the topic using the model you have chosen. What predictions does the model make? How do these predictions compare to what we see in reality? • How...

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Question Preview:

Task: Choose a product, firm, industry, or market that you are interested in, and analyze it using the models and tools that we have studied throughout the semester. In particular, discuss the following: • Briefly describe the topic you have chosen (e.g. the product/firm/industry/market) • Discuss how this topic fits into one of the models we have studied (e.g. how well does it fit the assumptions of the model?) • Analyze the topic using the model you have chosen. What predictions does the model make? How do these predictions compare to what we see in reality? • How could you enrich the model to better describe the topic you are studying (e.g. what could be added to the model)? Your final draft should be approximately 1 to 1.5 pages long; certainly no longer than 2 full pages. This project is individual: you should write your own submission. Your grade will be based on the originality and creativity of your final draft, and on the effort you have put into the project. All work must be typed, not handwritten. The final draft is due in class, on October 19th (the last day of lecture). You may submit a first (preliminary) draft to me by email, by 11:59pm on October 9th. If you do, I will give you useful feedback about the topic you have chosen and about the analysis you have done so far (e.g. I might give you some suggestions about what makes sense or doesn’t, or about what other models you could use to address your topic). Submitting a first draft is optional, but highly encouraged, because I will be able to tell you if you are on the right track or not for the final draft! Advice: • Choose a topic that you personally are really interested in. Working on this project will be much more fun if you are writing about something you genuinely care about! • We have seen examples of this kind of analysis throughout lectures the whole semester! For example, in lecture 2 we discussed bank loans, student discounts, gym memberships, and business and coach seats as examples of price discrimination, as well as TV packages as an example of bundling. In lecture 3 we discussed amusement park tickets and cover charges for clubs as examples of two-part tariffs, as well as genetic tests and student IDs as examples of evidence-based pricing. 1

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Introduction:

Let us consider the soft drink industry. Soft drinks are carbonated drinks that contain sweeteners and a flavour (natural or artificial). A soft drink is one of the most preferred beverages because of its high availability at a very reasonable price. Colas, lemonade, bottled water, packed juices, citrus soda etc. come under the category of soft drinks. Soft drinks are available in different versions in order to target the different segments of the market like regular/ diet, caffeinated/

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