Another edition of @spectrumecons's sixweekeconomics challenge 6.
Thanks to @spectrumecons for this contest.
So in this challenge, we are to decide if it is better to cooperate or compete, or cooperate with some and compete with other, while stepping into the shoes of the bakeries an decide the best approach.
So let me try idea::
Meanwhile, I am more of a politician than being an economist. But then, I feel that a political approach could be applicable when it comes to competition / cooperation. (because it is like a game).
In this challenge 6,two things / entities are the "bone of contention"; fame / popularity, and profit. However, these two are dependent on the cost of raw material, production volume and the production facilities of these various bakeries.
Therefore, entering into the shoes of these bakeries::
A. Thompsons' Bakery
Having the best price / quality for customers, I would feel at ease until the advent of another bakery that has almost same cost of raw material, and even the best production facilities which with them, best buys could replicate other bakeries' products.
Since Best Buys production volume is of medium size / volume, it appears more favorable to cooperate with and not compete with. Furthermore, the facilities of Best Buy enables customization of products, which would be an added milestone if Thompsons should cooperate with Best Buys.
In competition, the arrival of Best Buy is a very serious threat to Thompson bakery.
B. Best Buys
In all ramifications, appears to be the best, except in production volume. The only bakery that has large production volume is Thompsons, therefore in terms of production size, Best Buy would choose to cooperate with Thompsons bakery to expand its (Best Buy) production volume.
The arrival of this bakery could be bad for all bakeries except draxton which has 80% unique products.
C. Draxton Bakery
Based on the fact that draxton has 80% of products to be unique, might as well entice Best Buy and even Thompsons. But BB and TB would be discouraged to form alliance with draxton because draxton procures raw materials at premium price and also, the production volume is small.
D. Yummy yum yum
This bakery procures raw materials at premium price, has small production volume, has 80% of products similar to Thompsons; therefore, neither Best Buy nor Thompsons would want to cooperate with yummy.
The arrival of Best Buy is the greatest threat, if not damage, most especially to yummy.
Yummy and draxton bakeries could both form alliance with each other, which would make them have 50% of their products unique and the remaining percentage similar to Thompsons.
However, if Thompson and Best Buy should merge, draxton wouldn't want to risk merging / cooperation with yummy (who has 80%products similar to Thompsons) and that might make yummy go out of business, thereby leaving draxton (80% unique products) to compete with the duo of Thompson and Best Buy.
Conclusion
To maximize profit / popularity, Thompsons bakery would likely cooperate with Best Buy bakery.
yummy and draxton bakeries could both form alliance with each other, which would make them have 50% of their products unique and the remaining percentage similar to Thompsons, and their price being 45% higher than Thompsons'.
Meanwhile, the cooperation between Thompson and Best Buy could definitely inhibit the cooperation between draxton and yummy, which would make yummy bakery disintegrate away from the game.
Thus, the game would most likely become :: Thompsons (TB) and Best Buy(BB) Vs Draxton(DB).
Or it could be
:: TB &BB competing against YB & DB
I hope my political mindset was reasonable in dealing with this case
Thanks for reading
This is an entry post into sixweekeconomics challenge 6.
::@spectrumecons/spectrum-economics-challenge-6-25-sbd-to-be-given-away