Publications
Publications
- March 1993 (Revised April 1995)
- HBS Case Collection
Signalling Costs
Abstract
NutraSweet's worldwide patent-protected monopoly on aspartame, the low-calorie high-intensity sweetener, ended with the 1987 entry of the Holland Sweetener Co. (HSC) into the European market. Following the arrival of a challenger, NutraSweet acted to reduce sharply the price at which it offered aspartame to its European customers. NutraSweet's pricing move raised the question: were its actions in Europe a credible signal of how it would respond to entry in the U.S. market (where its patent was due to expire in late 1992)? This case explores some aspects of the game between a challenger (such as HSC) that is looking to enter a market and an established player in the market (such as NutraSweet) that may engage in signalling behavior.
Keywords
Patents; Competition; Price; Market Entry and Exit; Food and Beverage Industry; United States; Europe
Citation
Brandenburger, Adam M. "Signalling Costs." Harvard Business School Case 793-125, March 1993. (Revised April 1995.)