To What Extent do Two Oligopolies, McDonald’s and Quick Compete in Close Proximity?

Topics: Supply and demand, Oligopoly, Giffen good Pages: 36 (4643 words) Published: April 22, 2014


To What Extent do Two Oligopolies, McDonald’s and Quick Compete in Close Proximity?

To What Extent do Two Oligopolies, McDonald’s and Quick Compete in Close Proximity? Abstract:
McDonald’s and Quick are major fast food franchises in Antwerp, they have over a dozen franchises throughout Belgium and over five franchises each, only in the city of Antwerp. The Keyserlei is an area in Antwerp I visit a lot due to the proximity of it from my house. This is where my keen interest in the franchise grew from. My weekly trips to the center of Antwerp culminated in either a burger or a milkshake from McDonald’s, Therefore I wondered why I choose one franchise over the other, why was McDonald’s more important to me than quick. To understand why I chose or for that matter of fact anyone chose McDonald’s over Quick or vice versa, it is important to collect data, such as total revenue, price of food and interviews with important heads at both McDonald’s or Quick. After obtaining all the data and results needed to analyze the competition between the two oligopolies, I found that most of the competition was non-priced based this was primarily due to the game theory. Since the franchises were not competing on price levels, it had to be something else, and I found it was non-price determinants, such as advertisement, sales promotions and branding. Finally after exhausting and analyzing most areas of non-priced competition between the two firms, I found that McDonald’s was the more important of the two firms and to a certain extend Quick was hiding in it’s shadow mostly due to the fact McDonald’s is the larger multinational firm operating worldwide. However this doesn't go to say there is no degree of competition as Quick still provides a moderate amount of competition especially based on it’s location and it’s sales promotions. Word Count: 283 words

Table of Contents

Heading
Page
Title Page
1
Abstract
2
Table of Contents
3
Background
4
Introduction
5
Kinked Demand Curve
7
Theory of Oligopoly
9
Analysis
14
Conclusion
27
Bibliography
30
Appendix
33

To what extent to do two oligopolies, McDonald’s and Quick compete in close proximity? Background:
McDonald’s is an international chain of fast food restaurants, established in 1955 in California; it currently has over 33,000 restaurants throughout the world, and is one of the largest franchises1. On the contrary Quick is a European based franchise serving fast food. It was established in Belgium in 1971 and has over 400 restaurants through most of Europe and North Africa2.

Introduction:
Oligopolies are a small number of large firms that dominate an industry; this is caused by high barriers to enter the specific market. Oligopolies are price setters rather than price takers this is due to the fact they have minimal competition3. Fast food restaurant chains such as McDonald’s and Quick are considered oligopolies in Belgium as they dominate the market for fast food. The Keyserlei is the center of Antwerp close to commercial landmarks such as the Antwerp Zoo and the famous Antwerp Central Station. Choosing a specific location as the Keyserlei for my investigation enabled my data to be more accurate and concise, much focus was put into only these franchises, which allowed my information to focus on the research question, rather than investigating all restaurant chains in the center of Antwerp. Furthermore this is one area where both these restaurants work in close proximity and compete on a daily basis. Fast food restaurants can compete in many different ways, namely through brand loyalty, promotion techniques, quality of food and finally variation in food products. It is important to check how the oligopolies compete, and what is their main determinant of competition. In order to carry out this investigation different data had to be...


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Blink, Jocelyn, and Ian Dorton. Economics: Course Companion. 2nd ed. Oxford: Oxford UP, 2007. Print.
Glanville, Alan. Economics from a Global Perspective: A Text Book for Use with the International Baccalaureate Economics Programme. Oxford: Glanville, 2003. Print.
Holroyd, Stephen. IB Economics. 1st ed. Oxford: Oxford Study Courses, 2004. Print
Love, John F. McDonald 's: Behind the Arches
University, UtahState. "Exam 3." â€” Free Online Course Materials. EduCommons, 2008. Web. 07 Sept. 2012. http://ocw.usu.edu/economics/introduction-to-microeconomics-1/exam3.htm.
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