Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 12

Koji Incorporated produces high-end cameras. Its typical camera comes with an array of options. The company has a good brand name.
a. Koji distributes its cameras through independent dealers who are given exclusivedistribution rights for their respective market areas. Discuss why it might make economicsense for Koji to grant its distributors exclusive territories.
b. Since Koji adopted this distribution system, it has experienced a double markup problem.What is a double markup problem
c. Discuss how Koji might use a two-part pricing scheme to reduce the double markupproblem. (Be sure to specify what the two-part pricing scheme would entail.)
d. Describe one other method that Koji might use to address the double markup problem.