Determine the optimal price for each sub-group, Financial Accounting

Assignment Help:

The objective is to assess the incentive to acquire information on consumer characteristics. We consider a monopoly. The firm incurs no production cost. There are M consumers with unit demand. Consumers' valuation for that good, denoted v, is uniformly distributed on the interval [0, 1] . A consumer with a valuation v buys the good if and only if the price for the good p is lower than v (p ≤ v). The firm a priori does not observe the valuation v. Nevertheless the monopoly has the possibility to acquire information, which will lead to a partition of the consumers into N subintervals of equal length. For instance if N = 2, the monopoly knows whether a consumer has a valuation in the interval [0,1/2] or [1/2,/1] and can set two different prices for each sub-group.

1. Determine the optimal price for each sub-group.

2. Deduce the profit of the monopoly. Is there a benefit to invest in information acquisition for the monopoly?

 

 


Related Discussions:- Determine the optimal price for each sub-group

How do you record this transaction, how do you record this transaction? ...

how do you record this transaction? May 18 Issues 30,000 additional shares of $2 common stock for $75 per share. May 25 Issue 8,000 shares of preferred stock for $125 per sha

Value added tax, 1. discuss how VAT system works by using relevant examples...

1. discuss how VAT system works by using relevant examples. 2. list and explain the VAT supply categories; provide relevant examples of each category. 3. provide a recommendation r

Prepare statement of income and comprehensive income, The following income ...

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2013 ($ in 000s): sales revenue, $

Evaluate price earnings ratio, Q. Evaluate Price Earnings Ratio? The P/...

Q. Evaluate Price Earnings Ratio? The P/E ratio is in general regarded as an important ratio for equity investors. The P/E for a company may be utilizing as a basis for compari

Revenue recognition, Do we recognise revenue if it will be assigned to othe...

Do we recognise revenue if it will be assigned to other party ?

Percent Gain, Assume you invest $150 per month in a stock. Stock prices are...

Assume you invest $150 per month in a stock. Stock prices are as follows: January $10.50, February $9.75, March $9.50, April $11.00, May $10.75, June $9.75, July $9.00, August $8.5

Compute the npv of the cash flows, Ace Company has a 30 percent marginal ta...

Ace Company has a 30 percent marginal tax rate and uses a 12% discount rate to compute NPV. The firm started a venture that will yield the following before-tax cash flows: year 0,

Lease or buy, La Favorite Pastry Shop has been in business since 1985 and s...

La Favorite Pastry Shop has been in business since 1985 and started with a large commercial oven that was built in 1955. Max, the owner is debating whether or not to purchase a new

Subsidiary company exclusion features, Subsidiary company exclusion feature...

Subsidiary company exclusion features 1) The standard does not require consolidation of a subsidiary acquired when there is evidence that the control is intended to be temporar

Write Your Message!

Captcha
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