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The mobile industry has become increasingly competitive in recent years. However, after years of outsourcing, mobile centers have returned to the US. An estimated 5
The mobile industry has become increasingly competitive in recent years. However, after years of outsourcing, mobile centers have returned to the US. An estimated 5 million Americans are employed in mobile centers. You have been asked to evaluate the mobile center industry based on information on the two largest call center supply markets, the mid-west US and the Canada. The average cost curves for Individual mobile centers in each location are as follows (in tens of thousands of dollars): ATC US =14-6q+q^ 2; ATC canada=18-8q+q^ 2 Overall demand for mobile centers (across both markets) is given by Q = 800 - 100P Where Q = the number of mobile centers demanded and P equals the price of a mobile center, in tens of thousands of dollars. Q1a). which location will firms use and why? Q1b). if a perfectly competitive market long term, how many firms will there be in the long run? what will HHI be? Q2 a) Which location will most firms looking for call center services likely pursue? Why? Q2 b) Given your answer in part a, what will the long run price for call centers be in the market? Assume that the market remains competitive in the
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