If two monopoly providers of complementary products coordinate their price setting, then they will both set their prices lower than they would than if they set them independently

1. Provide and explain the general model to prove the above argument. (Assume that two firms have fixed costs respectively)
2. 
   
3. If the demand function has the linear form D(p)=a-bp, p=p1+p2, what are the price in equilibrium?

Answer rating: 100% (QA)

You are correct that under certain conditions two monopoly providers of complementary products can benefit from coordinating their price setting and s... View the full answer