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What values of c would a monopolist that sells its output

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Reference no: EM133552318

Question: Assume that demand for services per period is Pt = 1000 - Qt where Q; is the stock of the durable consumed. Let the discount factor for both consumers and the ?rm be 1. Suppose that the monopolist has a choice: she can either produce a product that is durable at zero marginal cost or she can produce a nondurable product-it provides consumption services for only one period-at marginal cost 6. Assume that there are only two periods.

(a) For What values of c would a monopolist that sells its output and cannot commit to prices choose the nondurable product?

(b) For what values of 6 would a monopolist that leases its output introduce the nondurable product?

Reference no: EM133552318

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