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Problem 2: Vertical Merger There is a single (monopolist; t shirt seller outside of Fenway Park. She buys her : shirts from a single (
Problem 2: Vertical Merger There is a single (monopolist; t shirt seller outside of Fenway Park. She buys her : shirts from a single ( monopolist ) t shirt manufacturer. It costs $2 to manufacture a t shirt and demand for t-shirts is P(Q) = 40 - 0.2Q. 'The t-shirt seller's bly mary ual meal is the whodak: rest of : t-shirt. (a) What is the equilibrium price of t shirts? (b) What is the equilbrium wholesale price of t-shirts that the manufacturer charges? (r) Show that iT the inanfebre Lake- over the rebail operation [vertically in egrabe's with the t-shirt seller), this berefits consumers o" t-shirts. P'roblem 3: Vertical Merger with Cournot Duopolists Refer to Protein 2. but now there are two t-shirt sellers (A and B) and two -sir. manuthe- lurer : I and 21. Both sellers cell the cane exact t-shirts and both manufacturers produce the same exact t shirts. Deamand and marginal costs are the same as Problen 2. (a) Would consumers be helped or harmed 's a merger between Seller A and Manufar- furer 1 if the new merged firm did not. supply t-shirts (foreclosed; to Seller B. (b) What is the forclosure effect? In other words, how much worse olf 's Seller ? aller the witical merger between Seller I and Manufacturer A
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