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All Day I Dream About (Market) Share

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I Am A Communist

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  1. do you agree that the adidas/reebok merger is such an unbeatable combination? Yes, they have increased market shares, but they're sacrificing price competition. with fewer price competitors, the value of existing competitors goes up, no? and it seems like the market kinda agrees--reebok's share price went up after the announcement, but so did nike's. whatever, i wear asics anyways.

    ross

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  2. I don't think price is an issue here. The insanely profitable portion of the sneaker market is a pretty well-defined niche on the high end–folks who will spend $150 for something that costs $5 to make, just because of the person who's name is on them. The demand in that market is relatively inelastic.

    I think if anything the merger is about managing endorsements. Someone like LeBron gets $100 million from Nike in part because of the fierce competition for his services; one fewer separate shoe company means one less corporation to play off another by athlete's agents chasing endorsement money, though of course two giants are capable of bidding each other up as well. But Reebok and Adidas get to combine their existing rosters of athletes and celebrities and capitalize on those people, and will be in a better position to actually go after the LeBron's of the future without it being a foregone conclusion that he'll Just Do It.

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