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Q2: Competition, market power and welfare [12 marks] a) Who benefits when firms develop more efficient production technologies (i.e. buyers, sellers, or both)? What role

Q2: Competition, market power and welfare [12 marks]

a) Who benefits when firms develop more efficient production technologies (i.e. buyers, sellers, or both)? What role does competition play, and what does this mean for dynamic efficiency? [6 marks]

b) Why do firms practise price discrimination? What are the consequences of price discrimination for producers, consumers and society overfall? [6 marks]

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