Four Roses and Blanton’s are competitors in the bourbon mark…
Four Roses and Blanton’s are competitors in the bourbon market. Four Roses has a 35% share in this market while Blanton’s has a 25% market share. The following facts are true for the purposes of this question: Four Roses sells 100 units per month at a retail price of $18. Four Roses’ marginal cost is $10 per bottle of bourbon. Blanton’s sells 200 units per month. The marginal cost of production for Blanton’s is $10 per bottle and it sells its bourbon at retail for $16. The two bourbon brands have considered merging for the last year and filed the proper paperwork with the Department of Justice just this month. The Department of Justice conducted an initial investigation and determined that the diversion ratio between Four Roses to Blanton’s is 60%. Calculate the GUPPI that measures Four Roses’ incentive to engage in a unilateral price increase after the merger (expressed in percentage terms).