Consider the following statements: (1) Exclusive dealing amounts to a restrictive agreement under the Competition Act, 2002. (2) The rate of growth in the service sector in India is highest among all the other sectors of economy. (3) Predatory pricing is not regulated under any law. (4) A company using sales force promotion and trade promotion is using "Pull" strategy. Indicate the correct answer out of the following:
While statements (1) and (2) are true, (3) and (4) are not.
Each of the four statements has to be tested separately, and the option chosen must match exactly which ones are true.
Statement (1) is true. Exclusive dealing, where a party is required to deal only in the goods of one seller, is expressly treated as a type of vertical restrictive agreement under the Competition Act, 2002. Statement (2) is true as well: the services sector has been the fastest growing sector of the Indian economy, outpacing agriculture and industry and contributing the largest share of output.
Statement (3) is false. Predatory pricing - selling below cost to drive out competitors - is specifically regulated, being treated as an abuse of dominant position under the same Competition Act, so it is certainly not outside all law. Statement (4) is also false, and for a definitional reason: promotion aimed at the sales force and the trade, that is at the channel, is a push strategy, because the firm pushes the product through intermediaries. A pull strategy aims promotion at the final consumer so that demand pulls the product through the channel.
Since exactly statements (1) and (2) are true while (3) and (4) are not, the first option is correct.
Hence statements (1) and (2) are true, and (3) and (4) are not.
Similar Questions
The market share data for an industry, comprising five companies, is given below :
Company Market Share (%) A 35 B 25 C 18 D 12 E 10 This industry’s three-firms Herfindahl-Hirschman index shall be :
Match the items of List-I with the items of List-II and find the correct combination:
List - I
(Market Structure)List - II
(Nature of industry where prevalent)(a) Perfect competition (i) Aluminium and passenger cars (b) Oligopoly (ii) Public utilities like Telephones and Electricity (c) Monopoly (iii) Manufacturing : T.V. Sets, Refrigerators (d) Monopolistic competition (iv) Farm Products : Grains The Competition Commission of India has no role in regulating which of the following?
Given below are two statements : one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A) : In monopolistic competition, firms face a downward-sloping demand curve that is more elastic than under monopoly.
Reason (R) : In monopolistic competition, close substitutes of the product are available in the market.
In the light of the above statements, choose the most appropriate answer from the options given below :
The kinked demand curve theory of oligopoly suggests that :
For perfect competition, indicate the correct code for essential conditions from the following :
(a) Large number of buyers and sellers
(b) Perfect knowledge of the market
(c) Homogeneous product for sale
(d) Absence of transportation cost
(e) Freedom of entry and exit of buyers and sellers from the market
(f) Rational Behaviour of buyers and sellers
Code :
Important Questions from Business Competition
- Choose the correct section of the Competition Act, 2002 Which provides that 'No enterprise shall abuse its dominant position' :
- The remedies for the violation of Sections 3 and 4 of the Competition Act have been laid down under
Select the correct code of the following statements being correct or incorrect.
Statement (I) : The ‘law of one price’ states that in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency.
Statement (II) : An ‘Efficient market’ has no impediments to the free flow of goods and services, such as trade barriers.
- Consider the following statements :
(a) The stage of industry's development (life cycle) cannot influence the nature of competitive rivalry.
(b) As the industry starts to mature in terms of life cycle, rules are rejected, consumer expectations about quality and performance are blurred and industry standards are put for modification.
(c) A major feature of maturing industries is the tendency for competition based on product pricing becoming similar.
(d) In declining industries, only the most efficient firms can earn reasonable profits.
In the light of Industry Life Cycle, which of the above statements are true ?
Codes : The market share data for an industry, comprising five companies, is given below :
Company Market Share (%) A 35 B 25 C 18 D 12 E 10 This industry’s three-firms Herfindahl-Hirschman index shall be :
