Problem 1. Market Entry (65 points) Setup For this problem, you will need to read the paper by Camerer and Lovallo (1999) posted on NYU Courses. We…
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Prior to beginning work on this discussion, read Tim Worstall’s article, One Benefit of Nancy MacLean’s Democracy in Chains – Public Choice and Rent…
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Price Discrimination

There are two types of consumers with inverse demands

P1= 20−2Q1 and P2= 16−2Q2. Assume for now that N1=N2 = 1. There is a monopolist providing the good with a marginal cost of 4.

1.1

What is the Uniform price that a monopolist would charge?

1.2

What would be the prices that a monopolist would charge if it could price discriminate (3rd degree)?

1.3

What would the prices be under 2-part pricing? (please include the membership fee and the unit price)

1.4

What would be the optimal bundles if the monopolist could not distinguish between consumer types

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