Studies suggest that brand loyalty is based primarily on real differences among competing products, suggesting that persuasive advertising is an ineffective means to maintain or increase market share.
83) For lock-in to be an effective competitive strategy, a firm must successfully raid the customer base of competing firms on a regular basis.
84) The addition of gasoline pumps at a grocery store is a good example of a network externality.
85) As the price elasticity of demand for a particular good decreases, the corresponding Lerner Index, and hence the amount of market power attributed to the firm that produces the product in question, decreases as well.
86) The Lerner Index is preferred to the Herfindahl-Hirschman Index as a measure of market power due to the former's simplicity and straightforward interpretation.
87) All else constant, so long as it is negative, as the cross price elasticity of demand between a firm's product and those of its competitors increases, so does the market power possessed by the firm.
88) If the cross-price elasticity of demand between two products is positive, we can conclude that the two products are substitutes.
89) Assume the market shares of the six largest firms in an industry are 15 percent each. The six-firm concentration ratio would indicate that the industry is highly concentrated, while the Herfindahl- Hirschman Index would not.
90) The various antitrust laws are written in very specific terms. Thus, there is little or no question as to when a firm has run afoul of one or more of these laws.
91) The purpose of the Horizontal Merger Guidelines developed by the Department of Justice and the FTC is to prevent customers from being harmed by the increased market power that might result from a merger of two or more firms.
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