The maximum number of firms operating in the market can be calculated when the licence fee is equal to zero: N+1 N+162 Licence fee = PS A - FC A 12 ? 100 000 000= 6 480 000 000 ? 0= 6 480 000 000 N+12= 6480 000 000 100 000 000 N+12 324 5 N+1=4 324 N =1 324 1 .N~7 5 5 Therefore, the range of firms operating in the market varies between 5 and 7. The differing producer surplus' calculated when N=5, N=6AN=7 are: 5+122 6+122 C . PS N =5=- 6 480 000 000 PSN=6 =- 6480 000 000 PSAN=7= 6 480 000 000 = $ 101 250000 (7 +1 ) 2 It can be seen that less firms in the market produce a higher producer surplus