Elucidate what is the minimal compensation t

Assignment Help Business Economics
Reference no: EM1351678

Consider an incumbent rm that produces at constant marginal cost cI and a potential entrant that, after paying a xed cost to enter f, produces the same homogenous good at a cost cE. Suppose the entrant is more ecient, cE < cI : Demand is given by D(p) = ô€€€p with  big enough.

1. In the case of no entry, nd the equilibrium price, pro t of the incumbent and the consumer surplus.

2. Compute the condition under which the entrant nds entry pro table (assume  > 2cI + cE).

3. Under the conditions found above, if entry occurs compute the equilibrium price and the consumer surplus. Suppose that now, the incumbent can o er a compensation t to the buyer in order to accept and sign an exclusive contract.

4. Elucidate what is the minimal compensation t that induce the buyer to accept the exclusivity contract?

5. What is the maximal compensation that the monopolist is willing to o er to the buyer? Can the incumbent deter entry by o FFering an exclusive contract?

Reference no: EM1351678

Questions Cloud

What is number of doughnut shops in the market : Assume Doughnuts R Us chooses to produce 150 doughnuts. What is the number of doughnut shops in the market.
Find mu k between the box and the floor : An 85 kg spacewalking astronaut pushes off a 655 kg satellite, exerting a 115N force for the 0.600 s it takes him to straighten his arms.
Optimal mix of processes zone- bc petrol daily demands : Excel Solver to evaluate the optimal mix of processes zone and man to minimize costs and meet BC Petrol daily demands.
Prepare a presentation on backgrounds and fonts : Can you still read the text? Is it too narrow or thick? Is an icon hidden by the background? You should also include tips for choosing backgrounds and fonts.
Elucidate what is the minimal compensation t : Elucidate what is the minimal compensation t that induce the buyer to accept the exclusivity contract. What is the maximal compensation that the monopolist is willing to o er to the buyer.
Step-wise answer to organizational structure : Step-wise answer to Organizational structure - Matrix Structures-This structure combines organizational product with the organizations functionality
Find the average induced emf in the coil : A 150 kg hoop rolls along a horizontal floor so that the hoop's center of mass has speed of 0.180 m/s. How much work must be done on the hoop to stop it.
Detemrine the current price per share : You have been given the following projections for Cali Company for the coming year. Detemrine the current price per share for Cali Corporation.
Further assume that amstel in anticipating of building : Further assume that Amstel in anticipating of building Durbin's studio and had purchased materials and refused other jobs so that he would have time in his schedule for Durbin's project

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd