Kibol A Case Study: ABC As A Pharmaceutical Company

Introduction

Only the pharmaceutical company ABC can produce the vaccine to stop the killer disease ‘Kibola’, therefore, ABC considered as a monopoly. A monopoly as a market structure exists when there is only one firm in the industry, which means it sells unique products.（Sloman, 2014）. In consequence, monopoly firms can control the supply of a good service and manipulate market to some extent. ABC as a monopoly firm, the biggest goal is to maximize profit. However, this objective is hard to achieve due to different environment and period. Furthermore, serving the public interest is also essential for companies in contemporary society. This essay will provide and evaluate several pricing options to gain the maximum revenue in both short-term

There are two ways to help ABC maximize profit. The first way is to limit price. It is used to keep the price down and restrict the size of profit to prevent new entrant. According to Figure 2, P (L) is limit price. If ABC charges lower price which means AC monopolist curve below the P (L), the new entrant must have to charge the same price or the lower one or it will not succeed to entrance the industry. On the contrary, the ABC can still keep competitive in this industry because of its brand building. Further more, ABC is a monopoly, which is also a economies of scale therefore ABC may have lower cost than other companies and more easy for it to limit price and get maximum

Therefore, it uses a plenty of strategies such as limit pricing and apply a patent to create barriers for other companies to entry and get high private interest. However, it also has responsibility to serve public interest. Therefore, it is useful to use price discrimination. For instance, for some customers from low-income families, ABC can provide them with lower price to show humanitarian social responsibility. It is also benefit for its brand building. Furthermore, the high profit of this vaccine can also encourage other companies to improve technology, which is benefit for the whole society. ABC as economies of scale can also efficient reduces the waste of resource and may able to provide consumers with product of higher quality and lower