Write brief explaination 1. Some discount stores advertise that they can sell fo

Question

Write brief explaination

1. Some discount stores advertise that they can sell for less because they buy directly from the factory and sell to the consumer, thus eliminating the middlemen. What is the flaw in this reasoning?

2. Shopping center developers often try to buy as much land adjoining the actual site of the shopping center as possible. Why?

3. Collusion tends to break down as a result of several inherent obstacles in forming an effective collusion. What are those obstacles and what constitutes evidence of an effective collusion?

Explanation / Answer

1. The flaw in this argument is that buying directly from the factory would involve higher transportation cost. Also, this will require the store to have its reliable logistics system in place to get the products to the store on time and without damage or wastage. Such a logistics capacity would involve significant cost.

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