Introduction

Eastman Kodak Company, commonly known as Kodak is an American multinational imaging and photographic equipment, materials and services company headquartered in Rochester, New York, United States. It was founded by George Eastman in 1889. Kodak is best known for photographic film products. During most of the 20th century Kodak held a dominant position in this sector. In fact, Eastman Kodak Co. is one of the dominant market share holders within the camera and other photography-related industries. Kodak pioneered amateur photography and is often credited for the invention of roll film and the first camera. The markets for color film and color photofinishing in 1954 were controlled by Kodak. It had over 90% of the amateur color …show more content…

First of all, according to the government, Kodak had engaged in geographical price discrimination against its United States customers. The evidence shows that Kodak charges a higher price for its film in the United States than it charges for the same film in other parts of the world. The prices that Kodak sets within the US are normally above the competitive levels. This, as the government states, is one of the proofs that Kodak exercises market power in the United States. Another important thing is the US customers’ strong preference for Kodak film and the resulting premium price that Kodak is able to obtain for its film in this country. Despite the price disparity, Kodak still continues to maintain 67%-75% share in the US. However, the evidence shows that the quality of Kodak film is not better than its rivals' film quality. The last item evidence relied upon by the government to support a finding that Kodak has market power within the United States is the fact that Kodak’s own elasticity of demand is two. According to the government, an own elasticity of two indicates that Kodak is earning excessive profits from its film. This, as the government states, is strong evidence that Kodak exercises market power in the United States. The significance of an own elasticity of two, in the government’s view, is that it indicates that the sales price of Kodak film is twice the short-run marginal cost. Thus, from