Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Two retail firms compete in prices (Bertrand competition with non-di erentiated goods) in a downstream market in which base demand is given by Pr = 1-Q. The rms can provide service si 2 f0; 1g in order to augment demand (e.g., they can describe all the features of the good for sale). However, such service is non-appropriable in that it cannot be conditioned on a customer making a purchase. As a result, service is in e ect a public good. Spefi cally, suppose that if the rms o er service levels of s1 2 f0; 1g and s2 2 f0; 1g, demand is Pr = 1 + max(s1; s2) - Q. Suppose further that if rms charge the same price, customers will randomly choose to buy at a rm that provided service (if both provide service or if neither provide service the market is split evenly). The cost of providing service is c(s) =:1 if s = 1; 0 if s = 0:
The only other cost that the retailers have is the wholesale price Pw for the good. Suppose that this price is set by an upstream wholesaler with monopoly pricing power.

1. If the wholesaler can only set the wholesale price Pw and then simply sells to the retailers whatever they demand, what is the equilibrium wholesale price, Pw, the equilibrium level of service provision s1; s2 and the equilibrium retail price Pr?

2. Suppose that the wholesaler can impose retail price maintenance that commits the downstream retailers to charge a minimum price Pmin. Given this option, what is the equilibrium minimum price Pmin, the equilibrium wholesale price, Pw, the equilibrium level of service provision s1; s2 and the equilibrium retail price Pr?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M947061

Have any Question? 


Related Questions in Microeconomics

Project-listen to this video asafter you work on your graph

Project- Listen to this video as/after you work on your graph. The lecture is on the 'Aftermath of the Financial Crisis' given by Ben Bernanke in March 29 th 2012. https://www.c-span.org/video/?305198-1/ben-bernanke-lect ...

Assignmentquestion a daoism amp confucianism as fisher

Assignment Question A: DAOISM & CONFUCIANISM. As Fisher states in our textbook, "Individuals often harmonize the apparently opposite characteristics of Daoism and Confucianism in their own lives." In what specific ways m ...

Assignment questionsque1 why validation of the software

Assignment Questions: Que.1 Why validation of the software requirement is necessary? List some conditions that should be checked in the validation phase of software requirement. Que.2 Six Sigma is used to reduce the defe ...

Economics assignmentcontentselect a news article with

Economics Assignment Content: Select a news article with economic implications within the previous six months and explain, analyze and expand the issue using the economic concepts and theory learned in this class. Includ ...

Question 1 the agrizone corporation invests 140140 million

Question 1. The Agrizone Corporation invests $14.014.0 million in a new inventory tracking system. A. The opportunity cost of Agrizone's decision is the value of leaving the money unutilized. B. The opportunity cost of A ...

1 this question is for discussion in teamsas the semester

1. This question is for discussion in teams. As the semester progresses. we will discuss these issues in class. Visit The World Factbook at https://www.cia.govlibrarypublications:The-world-factbook'. In "Please select a ...

Assignmentyou have been asked to assist your organizations

Assignment You have been asked to assist your organization's marketing department to better understand how consumers make economic decisions. Write a 1,050-word analysis that includes the following: • The impact the theo ...

Assignment production cost analysis and estimation applied

Assignment: Production Cost Analysis and Estimation Applied Problems Please complete the following two applied problems: Problem 1: William is the owner of a small pizza shop and is thinking of increasing products and lo ...

Assignmentinstructions the topic of the research paper will

Assignment Instructions: The topic of the research paper will be any disease or condition of the body. The paper must include a thorough description of the disease/condition; current statistics of those affected - epidem ...

Microeconomicsdiscussion forumnote the video has closed

Microeconomics DISCUSSION Forum Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu. Note: The video has Closed C ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen