Question
Consider a monopoly with marginal cost equal to 4. There are two types of customers: high type (H) with demand p = 20 - Q
Consider a monopoly with marginal cost equal to 4. There are two types of customers: high type (H) with demand p = 20 - Q and low type (L) with demand p = 16 - Q. a. Assume the monopoly can observe and distinguish the types of the consumers. The monopolist would like to offer the consumers two different packages (FH, PH, QH), (FL, PL, QL), where F is a fixed fee. Each customer is trapped and can only buy the package offered to them. Determine the values of F, P and Q in each package. (b) Now suppose: i) even though the monopolist know there are two types of consumers but can't verify the type of customer; ii) that any customer is free to choose 2 the package s/he wants; iii) the number of low type & high types customers are such that it is better to offer two packages(one for low type & the other high type) rather one package. What packages (FH, PH, QH), (FL, PL, QL) should the monopolist offer now
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