How a time consistency problem arises

Reference no: EM132150140

Question: (1) Can it ever be the case that third degree price discrimination increases social welfare? If so, present an example to illustrate. If not, explain why.

(2) Use the context of the durable goods monopoly problem to explain how a time consistency problem arises in that setting, and how the inability to commit to a pricing strategy erodes profits.

Reference no: EM132150140

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