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Start with setting up profit equation: $$\max_p \pi = (p-c)D(q)$$ Then substitute demand in: $$ \pi = (p-c)(B-bp)$$ Take derivative of profit and equate it to 0: $$\frac{d \pi}{dp}=B-2pb + cb=0$$ Now solve for optimum price: $$p^*= \frac{B+cb}{2b}$$ There is also alternative way how to get to the same solution that uses elasticity of demand. There is well ...


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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 ...


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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 ...


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Answer to Original Question Assuming Limited Supply In my opinion equating the two is fallacious from outset. The reason for this is that you can have cases where you have both monopoly and limited supply, only limited supply or only monopoly or neither. In addition, these have different implication for firm firm behavior in general depending on market ...


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A monopolist prices by setting marginal revenue equal to marginal cost. The marginal revenue depends on demand. If you have a fixed supply in the sense that the quantity offered is always some $q\in \mathbb R$ independent of the price, then you define a market equilibrium such that the demanded quantity at the equilibrium price must be equal to $q$. As a ...


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Existence of rent has nothing to do with whether market is competitive or not. First there are different definitions of rent. As explained in the Palgrave dictionary of economics (Alchian 2017): Rent’ is the payment for use of a resource, whether it be land, labour, equipment, ideas, or even money. The term is often restricted to payment for use of land or ...


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We could argue about some of your assumptions, but that would lead to unnecessary opinion-based discussion. In a (perfectly) competitive market everyone is a price taker. This is not the case here. Therefore, it is not a perfectly competitive market. However, before this is taken as a reason to radically restructure society and property rights, you should ...


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In narrow sense of the word the article was definitely peer reviewed as it was published in Journal of Legal Analysis. But in this narrow sense it was most likely peer reviewed by jurists not economists. In a broader sense of the word there are economists who had a look at the claims as well. For example, review of their book by Levine (2020) in Journal of ...


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