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Question: In examining the relationship between a manufacturer (e.g., Samsung) and a Retailer (e.g., Best Buy), let us imagine that there is a cost (d) of adding an IoT chip to the base refrigerator. Modify the model we used in class to study whether it is worthwhile for Samsung to add the IoT chip. What is the value of d above which the IoT chip should not be added?
The following can be assumed: The consumer demand model is q = a - αr, where q is the demand and r is the retail price. The profit of the retailer is the profit from selling the product plus a cross-selling profit given by βq Under IoT, the unit product cost to the manufacturer is the unit cost of the fridge (c) plus the cost of the chip (d). The profit of the manufacturer is the margin per fridge times the demand.
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What are the major political, economic or social impacts of this decision? Whose interests did it ultimately serve?
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