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Chessplay.com is a gaming site to play chess. When a person signs up, she or he fills out a profile, then pays money to play
Chessplay.com is a gaming site to play chess. When a person signs up, she or he fills out a profile, then pays money to play games. The company has hundreds of games in the computer system and it costs nothing to let customers play chess (so MC = 0). Suppose that there are two types of customers: addicted customers have an inverse demand for games given by pd = 402qd and occasional players have inverse demand pn = 202qn. The company has exactly one of each type of customer. 1 (i) If the game that the customers fill out has enough information in it to allow Chessplay.com to perfectly price-discriminate, what will the company's profits be? (ii) What would the company's profits be if it engaged in uniform pricing (charged a single, per unit price)? How does this compare to your answer from part (i)? (iii) Now suppose that the information that the customers provide in their profile does provide the company with some information. Specifically, it is not enough to allow the company to perfectly price discriminate, but it does allow the company to observe whether or not the customer is addicted. What will its profits be if it
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