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Find the profit-maximizing prices and outputs

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1. Assume that demand for services per period is Pt = 1000 - Qt where Qt is the stock of the durable consumed. Let the discount factor for consumers and the firm be given by δ. Find the profit-maximizing prices and outputs for a durable goods monopolist with zero marginal costs when there are two periods for the following:

(a) A monopolist who leases.

(b) A monopolist who sells its output, but is able to commit to prices.

(c) A monopolist sells who its output, but is not able to commit to prices.

(d) What is the impact of a discount factor less than one? Why?

Reference no: EM13889983

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