Reference no: EM131082077
Industrial Organization
Suppose we have two types of consumers (for simplicity we’ll assume that there is one person of each type). They have inverse demand curves given by:
p1 =110−2q1 and p2 =70−4q2.
Initially, we will assume that the monopolist can tell them apart and that consumers cannot change or fake their type. Let the marginal cost of production be equal to 10. Label group 1 as the “high type” and group 2 as the “low type.”
(a) Derive the optimal two-part tariffs (F1, p1; F2, p2) for the two groups.
(b) What is the corresponding optimal block pricing scheme?
(c) Now suppose that the monopolist cannot tell the two consumer groups apart. Define and explain what the term incentive compatible means in this context.
(d) How much surplus does the high type get from buying the low type’s package? Derive a general expression, A(q2), for this surplus in terms of q2.
(e) Will the low type want to buy the high type’s package?
(f) Holding the quantities fixed at their levels from part (b), what is the optimal block pricing scheme that satisfies the incentive compatibility constraints?
Condition of price discrimination
: Which of the following is not a condition of price discrimination
|
Break-even point in units of product per period
: (a) Calculate: (i) the profit or loss at an output of 150,000 units of product per period (ii) the break-even point in units of product per period.
|
What type of leader are you aspiring to be
: What type of leader are you aspiring to be? Please note one person that you would like to model your leadership behavior after. Be sure to note who the person is and why would you want to model their behavior. Finally, note what steps you could take ..
|
Nash equilibrium in pure strategies
: Consider the simultaneous-move game with two players that has no Nash equilibrium in pure strategies, illustrated in Figure 4.14 in Chapter 4. If the game were transformed into a sequential-move game, would you expect that game to exhibit a rst-mover..
|
What is the corresponding optimal block pricing scheme
: Suppose we have two types of consumers (for simplicity we’ll assume that there is one person of each type). They have inverse demand curves given by: What is the corresponding optimal block pricing scheme? Now suppose that the monopolist cannot tell ..
|
Creating flow charts
: You're desperately in love with another person, but that person doesn't know you exist. You decide to skip the whole getting-to-know-you routine, and cast a love spell.
|
Licensing proprietary technology to foreign competitors
: Licensing proprietary technology to foreign competitors is the best way to give up a firm's competitive advantage. Discuss whether you agree or disagree with this statement.
|
Pricing strategy would these firms consider
: Two competing soft-drinks firm Cepsi and Poke are entering a new market where neither has been sold before. What type of LR pricing strategy would these firms consider?
|
What is minimum income necessary to achieve total utility
: A consumer has preferences for apples (A) and Oranges (Or) given by the utility function U(A,Or) = log(A) / 2 + log(Or) where log() is the natural logarithm function. The Marginal Utility for A is 1/2A and the marginal utility for Or is 1/Or. What i..
|