3

A monopolist maximizes profit. For me, it is usually easier to do this in the quantity space. So you rearange the demand and maximize $$\max_{Q_p,Q_r} \quad P_p(Q_p)Q_p + P_r(Q_r)Q_r - TC(Q_p+Q_r)$$ $$\max_{Q_p,Q_r} \quad (Q_p-10)Q_p + (28-2Q_r)Q_r - 5-2(Q_r+Q_p) -\frac{(Q_r+Q_p)^2}{8}$$ The FOC gives you two equations with two unknowns, $Q_r$ and $Q_p$, ...


3

tl;dr: Prices are identical because firms are identical. Profits of firm $i$ depend on own price $p_i$ and on neighbors' prices $p_{i-1}$ and $p_{i+1}$. Prices are set simultaneously, therefore competition in this market is described by a (normal form) game. A strategy is a price, and your formula for $p_i$ is the best response function, showing firm $i$'s ...


3

Depends what exactly is the authors definition of “radical markets”. A predominant consensus in the economic field is that a mixed economy which relies predominantly on market form of organization but also has government stepping in correcting major market failures and some macroeconomic management is economic system that delivers the greatest amount of ...


2

In the typical textbook treatment of the two-part tariff model, income effect is ignored/assumed to be negligible. Goldman, Leland, and Sibley (1984) provided detailed comparison of optimal nonlinear pricing strategies (of which two-part tariff is a special case) with and without income effect. Their conclusion is When [income effects] are absent, the aim ...


1

The previous +1 answer gives the correct economic mechanism but let me give you some case specific answer here. First of all there actually already is another drug that targets the same disease called Spinraza (see here) with cost of \$750,000 for the first year and then \$350,000 per year after that, so about \$4 million a decade. Assuming people with this ...


1

It could work (it would depend on model parameters) if you would assume that it is impossible for firm to enter the market once firm exists. This is actually quite complex and long problem so I will provide only partial solution. This would be a sequential Bertrand competition problem (since you assume that firms only can compete on prices). Here in first ...


1

In typical textbook two-part tariff there won't be an income effect because either demand will be just assumed to be given by some function or even if there is a utility function it won't feature budget constraint (e.g. see examples of such simple problems in Belleflamme and Peitz, Industrial Organization: Markets and Strategies pp 227-234). In such cases ...


1

It may not be a 100% match (and the details are a bit fuzzy in my memory), but I believe the model would be similar to Ericson and Pakes (1995). In their model, there are $N$ firms who make sequential choices Whether to enter the market or not (in your case, to consume or not), which is a discrete choice. How much to invest if they have entered (in your ...


1

Your figures reports ex-post (say end of year) returns on capital investments. Ex-ante (beginning of the year, or before the investment) these returns are random and unknown, and there is a trade-off between return and risk. If investor $i$ is investing rationally her assets in firm $j$ instead of $k$, according her specific risk aversion and information set ...


1

Edit: after OP made changes to his question and clarification this answer became less relevant. I am still keeping it here because OP said some parts of it and references are still useful. There are several reasons why even if all markets were perfect rates of return would not equalize. I will just focus on some major ones. Many countries have some capital ...


1

Your attempt is almost correct. Let the demand function be $D(p) = p^{-\epsilon}$ and the cost function some $C(D(p))$ so that $R(p) = D(p)p = p^{1-\epsilon}$, right? Then, I'd rewrite your first and second order conditions - as you only provided the expressions but it would be great to write them in a form of equations (or inequalities). So that: First ...


1

Data on employment usually comes out a month or two (sometimes a year) after the reference period. The Bureau of Labor Statistics (https://www.bls.gov/) puts out data on employment (who is working right now) but to see the effects of our current crisis will take time to show. Here are some links to the employment data that the BLS produces: National ...


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