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In a six-firm market, if all firms charge the monopoly price, the per-period industry profit equals $500,000. In that same six-firm market, if all firms
In a six-firm market, if all firms charge the monopoly price, the per-period industry profit equals $500,000. In that same six-firm market, if all firms charge the prevailing price, the per- period industry profit is $250,000. If the pricing period is one-month long, what is the maximum discount rate required for each firm to have an incentive to independently price at the monopoly level? Show your work for full marks.
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