Verizon has a monopoly on data plans

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Suppose Apple has a monopoly on iPhones and Verizon has a monopoly on data plans. An iPhone without a data plan is worthless, and a data plan without an iPhone is worthless. Thus there is no such thing as a demand for iPhones or a demand for data plans; there is only a demand for the combined iPhone-plus-data-plan. This demand is of the form P = 100 ? Q. The marginal cost of providing either an iPhone or a data plan is zero. Suppose that Apple first announces a quantity of iPhones, then Verizon announces a price for data plans, then Apple announces a price for iPhones. What are those quantities and prices?

Reference no: EM13735428

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