Question
Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25
Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25 per-unit, and marginal cost to the retailer is $10 per-unit plus $m per-unit that is paid to the manufacturer. If the firms were to enter into a two-part pricing contract, what would be the price set for $m?
Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25 per-unit, and marginal cost to the retailer is $10 per-unit plus $m per-unit that is paid to the manufacturer. If the firms were to enter into a two-part pricing contract, what would be the *minimum* amount for $T?
Consider a vertical market with one manufacturer and one retailer. Market demand is P = 400 - Q, marginal cost to the manufacturer is $25 per-unit, and marginal cost to the retailer is $10 per-unit plus $m per-unit that is paid to the manufacturer. If the firms were to enter into a two-part pricing contract, what would be the *maximum* amount for $T?
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