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3. For the airport-developer example, a. Compute the profits of the airport if it operates independently. b. What levels of x and y are chosen
3. For the airport-developer example, a. Compute the profits of the airport if it operates independently. b. What levels of x and y are chosen by the merged firm? Show your work. c. Suppose that instead of going through with the merger, the airport says to the developer: you choose how many flights Ishould y, and compensate me for any profits lost as a result. i. How many flights will the developer choose? ii. How much compensation will she pay to the airport
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