Reference no: EM131249349

A monopoly manufacturer sells its product through a network of n retailers, to each of whom it has assigned an exclusive territory. Within their territory, the retailers are themselves monopolies.Sales of each retailer are q = (a - bp)s1/2where p is the retail price, s is the level of service provided by the retailers, and a and b are parameters that are identical for all retailers. The retailers choose both p and s so as to maximize their profits. Each unit of services provided costs them $1 and the manufacturer charges them a wholesale price of m for each unit of the product, but otherwise they have no costs. What level of p and s do they choose? What level of m does the manufacturer choose if its unit costs of production are constant at c?