There are 10,000 identical buyers, each of which could buy one mechanical joint. The buyers WTP are $800 and $1800 for, respectively, defective and perfect joints. (Note: the dierence in WTP is exactly equal to the expected cost of xing a defective joint, $1000). Firms maximize prots. Buyers try to maximize the dierence between their WTP and the price of the mechanical joint that they buy. If the price of a joint exceeds their WTP, they prefer to not buy the joint