Q. 1) Consider a firm selling two products, A and B, that substitute for each or. Suppose that an entrant introduces a product that is identical to product A. What factors do you think will affect (a) where a price war is initiated and (b) who wins price war?

2) Following table reports distribution of profits (on a per-disc basis) for different steps in vertical chain for music compact discs:
Artist: $ .60
Record company: $1.80
Retailer: $ .60
Use five forces to explain this pattern. (Note: re are about half a dozen major record companies, including Warner, Sony and Polygram. y are responsible for signing up artists, handling technical aspects of recording, securing distribution and promoting recordings.)

3) Consumers often identify brand names with quality. Do you think branded products usually are of higher quality than generic products and therefore justify their higher prices? If so, why don't all generic product makers invest to establish a brand identity, thereby enabling m to raise price?