I am trying to do an exercise with a Monopoly Firm with 2 production plants that supplies 3 different markets.

I know how to do every case (Multiplant monopoly or third degree price discrimination), but since this exercise combines both cases, I dont know how to solve it.

Can anyone tell me how to proceed? This are the costs for every plant, and the demand for each market, for clarification.



1 Answer 1



The following are the necessary conditions for profit maximization:

Monopoly with 1 plant and 1 market: $MR = MC$

Monopoly with 1 plant and 2 markets: $MR_1=MR_2=MC$

Monopoly with 2 plants and 1 market: $MR = MC_1=MC_2$

I'll let you figure out the rest.


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