Persuasive Essay On Coke Vs Pepsi

An oligopoly is defined as an industry where there are small quantities of firms. By small quantity of firms, it is meant that the quantity of these companies should be sufficiently small for there to be deliberate interdependence, where each firm is mindful that its future prosperity depend on its own strategies, and also the strategies of its competitors. Firms in an oligopoly can use different types of tactic to amplify their profits. An industry is defined as the production of goods or services within the economy (wik). There are different firms that make up different industries. This research paper will focus on two cola companies called Pepsi, and Coca-Cola. Coca-Cola and Pepsi are in an oligopoly market. They sell a homogeneous product so they can be in control over the price of cola. Not only that, but they will think about each other’s …show more content…
In an oligopoly, the smaller number of firm, the more difficult for new rivals to enter into the market. Coke and Pepsi have been opened for business since the 1800’s. Today, they are very well established, with deep roots everywhere. They have advanced technology to reduce the cost of production. They also have well-managed distribution channels bottlers, and suppliers. They also know their customers very well. Since they are the two most dominant cola companies, they have huge sale volumes. When new rivals enter the market, they will usually lower the price of their products and the new rivals will have to follow. After some time, they will still survive in the market, even operating at a loss, but the new rival will be unable to hold out due to the loss and will have to shut down. Sometimes they raise the price to protect the industry from being shared by new firms. Aside from this, brand loyalty is what shuts down new rivals. Pepsi and Coke have a strong following in the cola industry, they are highly recognizable in the entire world. They have patents,