In 2006, the five leading suppliers of digital cameras in the United States were Canon, Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms was 60.9 percent. The leading...

Extracted text: In 2006, the five leading suppliers of digital cameras in the United States were Canon, Sony, Kodak, Olympus, and Samsung. The combined market share of these five firms was 60.9 percent. The leading firm was Canon, with a market share of 18.7 percent. The own price elasticity for Canon's cameras was –4.0 and the market elasticity of demand was –1.6. Suppose that in 2006, the average retail price of a Canon digital camera was а $240 and that Canon's marginal cost was $180 per camera. 1. Based on the above information, discuss industry concentration, demand and market conditions, and the pricing behavior of Canon in 2006 and explain how the industry environment significantly influence the performance of the digital camera firms. 2. Suppose you were the CEO of Kodak, what would you do to avoid its business failure? Please apply appropriate analytical tools from managerial economics to your analysis.