Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

Question: 1. Vertical Integration and Franchising Fees. Suppose an upstream manufacturer sells a product A which he can produce for a marginal cost of 4 dollars to two downstream distributors who compete in a Cournot game.The distributors face the following demand,marginal revenues and marginalcosts

Px = 260 - 5Q

MR1 = 260 - 10q1 - 5q2

MR2 = 260 - 10q2 - 5q1

MC = 6 + PA

Where PA is the price the manufacturer charges for A. Since the distrib-utors have market power the manufacturer is thinking of using a one timefranchising fee to maximize its pro?t.

i) What would are the prices, quantities and profits when the distributorsface a perfectly competitive market?

ii) What is the franchising fee and PA the manufacturer should choose tomaximize profit if this situation is repeated? Assume collusion is impossibleand the discount rate is 6 percent. (HINT: This does not require calculus. )

iii) How much do the distributors produce under this franchising system? What is the price? How does it compare to part i?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92597900

Have any Question?


Related Questions in Microeconomics

Question historically the value of the dollar has increased

Question: Historically, the value of the dollar has increased when the price of oil has risen, and declined when the price of oil has fallen. Explain why this has occurred, taking into account the fact that the US import ...

Question choose and focus on one negative consequence of

Question: Choose and focus on one negative consequence of globalization. Explain what the issue is, and why it is problematic for the world. Describe what you think should be done to improve this situation. If you think ...

Question in the grim trigger example of the text show that

Question: In the grim trigger example of the text, show that if the discount rate is low enough it pays the potential cheater to adhere to the agreement for two (or more) periods rather than break it in the first period. ...

Question suppose that large oil reserves are discovered off

Question: Suppose that large oil reserves are discovered off the coast of Cuba, and these reserves will increase the world's supply of oil by 2 percent. If the elasticity of demand and supply of oil are -0.20 and 0.40, r ...

Question what does ambulance restocking mean and who pays

Question: What does "ambulance restocking" mean and who pays for it? How can fraud and abuse problems result? The response must be typed, single spaced, must be in times new roman font (size 12) and must follow the APA f ...

Question france and tunisia both have mediterranean

Question: France and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In France it takes two hours for each worker to harvest green beans and two hours to har ...

Question a consulting firm estimates the demand by local

Question: A consulting firm estimates the demand by local businesses for attendance at a pro sports team's games: PB = $140 - 4AB where PB is the ticket price paid by businesses, measured in dollars, and AB is their atte ...

Question suppose the government cuts corporate income taxes

Question: Suppose the government cuts corporate income taxes, hence boosting I. However, S has declined because the deficit has increased. Explain how the economy returns to equilibrium where I = S on an ex post basis. T ...

Question use the internet to search for an example of an

Question: Use the Internet to search for an example of an enthymeme in the media (e.g., Internet, television, radio, newspapers, etc.). • You may find an op-ed, political piece, advertising, et cetera. • Identify the imp ...

Question why might mcdonalds and its franchisees disagree

Question: Why might McDonald's and its franchisees disagree on the proper retail price to charge? How do the incentives of the parent and its franchisees differ under a standard revenue-sharing franchise contract? The re ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved