Which of the two possible outcomes are pareto efficient

Assignment Help Other Subject
Reference no: EM133358940

Question: Suppose that two firms, an incumbent and a potential entrant, compete in a market. If they both operate, the resulting profits for the incumbent and the potential entrant are $30 million and $5 million, respectively. If the potential entrant decides not to enter the market, the resulting profits for the incumbent and potential entrant are $100 million and $0, respectively. Assume that it is not an option for the incumbent to exit the market.

(a) Which of the two possible outcomes (for the potential entrant to enter or not enter) are Pareto efficient?

(b) Now suppose there are side payments available. Which of the two possible outcomes is Pareto efficient?

(c) Is it possible that the incumbent will agree to pay for the introduction of side payments?

(d) Now suppose that side payments are allowed, but it costs $80 million in legal fees to actually use them. Which of the two possible outcomes (for the potential entrant to enter or not enter) are Pareto efficient allocations? (For simplicity, please assume no one is made better off by the $80 million fees.)

Reference no: EM133358940

Questions Cloud

What would be the businesses competitive advantage : If you were to own a business, what products (goods and/or services) would be sold? What would be the businesses competitive advantage
You are pitching a new fast food concept to this group : Using the information presented in the text, as well as your own insights/experiences prepare a brief summary of your product pitch
Why are financial principles important to a business explain : Why are financial principles important to a business? Explain
Explain the motivation for the internationalization : Explain the motivation(s) for the internationalization. Identify the entry mode chosen (e.g., exporting, licensing, strategic alliance, joint venture
Which of the two possible outcomes are pareto efficient : Now suppose there are side payments available. Which of the two possible outcomes is Pareto efficient and Is it possible that the incumbent will agree to pay
Identify theme of excerpt from the heart of darkness : Identify the theme of this excerpt from The Heart of Darkness, by Joseph Conrad, and explain the author's interpretation of the British Empire.
What has your personal experience been with social loafing : What has your personal experience been with social loafing? In what way might you and other team members contribute to what is perceived as social loafing?
Why did they make it this way : Parliament contains the representatives of all Canadians and all parts of Canada. Why did they make it this way - Canada has an economy based on resources
What would your team need to know : What would your team need to know - is it the entire team? Specific members? Why do you think this

Reviews

Write a Review

Other Subject Questions & Answers

  Cross-cultural opportunities and conflicts in canada

Short Paper on Cross-cultural Opportunities and Conflicts in Canada.

  Sociology theory questions

Sociology are very fundamental in nature. Role strain and role constraint speak about the duties and responsibilities of the roles of people in society or in a group. A short theory about Darwin and Moths is also answered.

  A book review on unfaithful angels

This review will help the reader understand the social work profession through different concepts giving the glimpse of why the social work profession might have drifted away from its original purpose of serving the poor.

  Disorder paper: schizophrenia

Schizophrenia does not really have just one single cause. It is a possibility that this disorder could be inherited but not all doctors are sure.

  Individual assignment: two models handout and rubric

Individual Assignment : Two Models Handout and Rubric,    This paper will allow you to understand and evaluate two vastly different organizational models and to effectively communicate their differences.

  Developing strategic intent for toyota

The following report includes the description about the organization, its strategies, industry analysis in which it operates and its position in the industry.

  Gasoline powered passenger vehicles

In this study, we examine how gasoline price volatility and income of the consumers impacts consumer's demand for gasoline.

  An aspect of poverty in canada

Economics thesis undergrad 4th year paper to write. it should be about 22 pages in length, literature review, economic analysis and then data or cost benefit analysis.

  Ngn customer satisfaction qos indicator for 3g services

The paper aims to highlight the global trends in countries and regions where 3G has already been introduced and propose an implementation plan to the telecom operators of developing countries.

  Prepare a power point presentation

Prepare the power point presentation for the case: Santa Fe Independent School District

  Information literacy is important in this environment

Information literacy is critically important in this contemporary environment

  Associative property of multiplication

Write a definition for associative property of multiplication.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd