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$650 $600 $550 $500 MCP $450 $400 $350 $300 $250 $200 $150 $100 $50 MCD $0 0 10 20 20 MRW 30 40 40 50
$650 $600 $550 $500 MCP $450 $400 $350 $300 $250 $200 $150 $100 $50 MCD $0 0 10 20 20 MRW 30 40 40 50 50 Dw 60 D 70 Suppose you are the manager of Visual Comfort, a company that manufactures lamps. The consumer (retail) demand curve is shown by D. Wholesale demand is shown by Dw. The marginal cost of production (MCp) and the marginal cost of distribution (MCD) are also shown. Assume that Visual Comfort has market power (like a monopolist) in the production of lamps, which are then sold to (perfectly) competitive retail distributors. (a) If Visual Comfort does NOT vertically integrate, what is the wholesale price and quantity of their lamps? (b) Again, suppose that there is NO vertical integration. In this scenario, what would be the retail price of lamps set by retailers? 4 (c) In parts (a) and (b), there is a monopoly in production and perfect competition in distribution. Would vertical integration affect the retail price and quantity? Explain yes or no. (d) If the monopolist acquired a retailer, would this acquisition be considered "forward" or "backward" integration? Explain
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