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Question: Suppose that c = 0, the discount factor is , and demand is constant elasticity, y = p^(elasticity).
(a) Write the equilibrium conditions for the competitive Ã-rm and the monopoly in this case.
(b) In order for the monopoly equilibrium condition to be sensible, what restriction must be imposed on ? Provide the economic explanation for this restriction.
(c) Compare the level of Ã-rst period sales under competition and under monopoly.
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