Question

Kodak has developed an important brand name through its advertising, innovation, and product quality and service. Suppose Kodak sets up a network of exclusive dealerships, and one of the dealers decides to carry Fuji and Mitsubishi as well as Kodak products. If Kodak terminates the dealership, is it acting in a pro- or anticompetitive manner?

Short answer

Answer: Kodak's decision to terminate the dealership would be considered pro-competitive in this case, as it aims to maintain the exclusive presence of its brand within its dealership network, supporting healthy competition among different camera brands without hindering the growth of competitor brands.

Step-by-step solution

Identify Kodak's Reason for Terminating the Dealership

Initially, we should aim to understand the reasons which might prompt Kodak to terminate the dealership. It is important to identify whether Kodak's decision is related only to the dealer carrying other brands or if there are other factors affecting this decision.

Understand Pro- and Anti-Competitive Behavior

Next, we need to clarify the concepts of pro- and anti-competitive behavior. Pro-competitive behavior promotes competition and allows businesses to innovate and grow within the marketplace, which ultimately benefits the consumers. Anti-competitive behavior occurs when a company uses its dominance to manipulate the market in a way that restricts fair competition and potentially harms the consumers in the process.

Analyze the Situation

Now that we have established the criteria for pro- and anti-competitive behaviors, we can use this knowledge to evaluate the given situation. Kodak has an exclusive dealership network, which might indicate that they want their dealers to only carry Kodak products and support the overall brand's visibility and value. In this case, one of their dealers is carrying competitors' products (Fuji and Mitsubishi). This act potentially ends up dividing the attention of customers and could lead to weaker sales for Kodak.

Decide If Kodak's Termination is Pro- or Anti-Competitive

Based on our analysis, Kodak's decision to terminate the dealership would be considered pro-competitive in this case. The company is trying to maintain its brand's exclusive presence within its dealership network, which can help strengthen its overall market position and support healthy competition among different camera brands. Additionally, Kodak terminating the dealership does not forcibly hinder the growth of other competitor brands, making it a pro-competitive move.