Entry deterrence, Predation, Divisionalization and Investment

c) (10 marks). Illustrate the profit and welfare consequences of exclusive dealing. by solving the "Exclusive Dealing and Economies of Scale" model done in class for the parameter values indicated below. Exclusive Dealing and Economies of Scale N buyers, Buyer demand: q = a - p, AC falls for Q S Q*, AC = c, Q > Q* Parameter Values: N = 125, a = 12, c = 4, Q* = 200