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Word Count: 374
On the 14th of June Coca-Colas soft drinks were banned from the markets in Belgium and later also in Luxemburg and France Two failures in the bottling system were the cause for the nausea that the people suffered According to the article it would have been better if they would have acted fast and told the whole truth Coca- Cola is in an ologopolistic market and therefore branding plays a great role It is possible that the company ha lost market shares due to this accident In the ologopolistic market the firms dont compete with price but rather with advertising and other non-price strategies Therefore one can predict that this scandal has shifted the demand curve to the left This accident can be seen as a negative externality The government should make Coca Cola increase their health controls internalise their externalities if scandals of this sort happen again They can enforce this by either subsidies reward of in this case taxation punishment People who would usually only buy Coca Cola due to the heavy advertising might try a substitute during the time of the ban This can be seen as a sort of free promotion for the others in the market According to the zero sum game the lose that Coca Cola is making right now is directly proportional to the profits the other firms are making in the respected market Coca Cola will need to take further actions to restore their brand name that they have established throughout all these years This will significantly influences their total added costs A strong brand has very few goods substitutes and it is very difficult for competitors to challenge the supremacy of the brand This health scandal might have opened the doors fro new competitors In the long run this can lead to Coca Colas costs for advertising to increase or furthermore they could lose control of the market and fall into a disequilibrium The accelerator
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