Frito-Lay dominates the snack food business, with half of a…
Frito-Lay dominates the snack food business, with half of all salty snack items. Competitors say that Frito-Lay has secured its dominant position with shelf-space rentals in retail stores, paying as much as $40,000 annually to secure prime shelf space in grocery and convenience stores. “Frito can afford it, ” says a regional rep for a competing company, “we can’t”. A. Explain what type of market structure firms in the salty snack foods market operate under. Why do you say that? B. What are the costs faced by firms in salty snacks? Please label whether these costs are fixed or variable, implicit or explicit. C. Why is there so much advertising in the salty snacks industry? Does advertise promote efficiency or inefficiency? Explain