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NETWORK EXTERNALITIES
Till this point we have assumed that people's demands for good are independent of each other.
Actually, a person's demand can be affected by the number of other people who have purchased that good.
If this is the case, a network exists externality.
Network externalities can be negative or positive.
A positive network exists externality if the quantity of a good demanded by a consumer increases in response to an increase in the purchases by other consumers.
Negative network externalities are the opposite of it.
(ii) Find a real-world example of second-degree price discrimination. Describe the important aspects of your example in detail and analyze it using economic theory. In particular,
Duopolist P=20-0.1Q where Q=QA+QB CA=QA CB=0.1QB2
The government decides to implement a new economic stimulus package targeted at American Farmers. The stimulus package gives every household a $300 prepaid credit card that may on
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