Quote:
Originally Posted by Marlowe
But Coke and Pepsi have to compete to get the contract, and McMaster will pick the one that makes most fiscal sense to them. Possibly because they get the products for cheaper, so McMaster can make more money on them (which was part of the agreement with Coke for the MSU, iirc) or through direct cash/equipment. So even though there would be no competition for individual consumers, they need to compete for McMaster itself.
Of course, that's all just theory. In reality, it probably looked a lot more like politics, with whoever was making the decision getting bribed with some nice lunches and sports tickets.
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I understand that, but the contract itself has nothing to do with how much the bottles are sold for (unless it's actually in the contract), it just has to do with how much Pepsi wants to pay to have a monopoly at McMaster. If McMaster makes money per bottle, then the price of bottle will go up. If McMaster doesn't then the price per bottle will still be high since Pepsi has no one to compete with and they have to pay for the monopoly.
In my opinion, McMaster wouldn't ask "What is the lowest price you can offer per bottle?" and would instead ask "How much are you willing to pay to have a monopoly here?".