Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 38

In 1972, the U.S. Federal Trade Commission brought a complaint against Kellogg, General Foods, and General Mills, claiming that their proliferation of breakfast-cereal varieties left no room for the entry of competitors and allowed them to earn near monopoly profits. How might you think about the characteristics of cereal as belonging on a Hotelling line? Explain how the product-proliferation strategy might work.