UG Technologies			GT Instruments
	SOC	$25		SOC	$60
	FC	$55		FC	$100
	CWP	$200		CWP	$400
Task 2	UG Technology has market monopoly
	Total Value Created
	Value Appropriated by UG Technologies
	Value Appropriated by Customer
	Value Appropriated by Supplier
	Added Value of UG Technologies
Task 3	Added value for GT Instruments processor
	Value Created by GT Instruments	Added Value of GT Instruments
Task 4	Appropriation of added value
Part (a)
	Maximum GT Instruments price P that pushes UG Technologies to zero profit	FC for GT Instruments	Value appropriated by GT Instruments	GT Instruments return on investment	Is return on investment greater than or equal to 150%? YES/NO
		$100

Task 2: Compute added value in a monopolistic market Consider a period of time when UG Technologies was the only firm manufacturing processors in this niche technology market, before the entrance of GT Instruments in the market. Because of its monopoly power, UG Technologies charges a price as high as the customer willingness-to-pay. Calculate the total value created by UG Technologies, the value appropriated by the firm, the supplier, and the customer (You need to first think what price UG Technologies charges), and the firm's added value. Complete the formulas in cells C14, C15, C16, C17 and C18 using the values in the blue cell at the top of the file (cells C6- c8). Task 3: Compute added value in a competitive market. Consider now the moment dreaded by UG Technologies when GT Instruments is considering whether to unleash their awesomeness (i.e., their better processor) into this niche technology market. Your task is to help GT Instruments in performing an added-value analysis. As we discussed in class, added value for a firm in a competitive environment is given by the difference between the total values created by itself and its competitor. Complete the formulas in cell B23, and then derive the added value of GT Instruments in cell C23. Task 4: Appropriation of added value Continue to consider GT Instruments entering the market to compete against UG Technologies. We assume that as long as there is competition in the market customers choose the product with largest difference CWP-P. The firm with competitive advantage is able to push the other to zero profit. You are trying to help GT Instruments in computing how much of the added value they can appropriate if they enter the market. GT Instruments is interested in achieving a return of at least 150% on its investment (return is the ratio (P-FC)/FC). (a) Complete the formulas in cells B30, C30, D30, E30 and F30 for GT Instruments using the values in the blue and yellow cells at the top of the file (cells C6-C8, F6-F8). Review the computation in the lecture notes for the maximum price that can be charged in a competitive market. The value in cell F30 should be "YES" or "NO". Task 2: Compute added value in a monopolistic market Consider a period of time when UG Technologies was the only firm manufacturing processors in this niche technology market, before the entrance of GT Instruments in the market. Because of its monopoly power, UG Technologies charges a price as high as the customer willingness-to-pay. Calculate the total value created by UG Technologies, the value appropriated by the firm, the supplier, and the customer (You need to first think what price UG Technologies charges), and the firm's added value. Complete the formulas in cells C14, C15, C16, C17 and C18 using the values in the blue cell at the top of the file (cells C6- c8). Task 3: Compute added value in a competitive market. Consider now the moment dreaded by UG Technologies when GT Instruments is considering whether to unleash their awesomeness (i.e., their better processor) into this niche technology market. Your task is to help GT Instruments in performing an added-value analysis. As we discussed in class, added value for a firm in a competitive environment is given by the difference between the total values created by itself and its competitor. Complete the formulas in cell B23, and then derive the added value of GT Instruments in cell C23. Task 4: Appropriation of added value Continue to consider GT Instruments entering the market to compete against UG Technologies. We assume that as long as there is competition in the market customers choose the product with largest difference CWP-P. The firm with competitive advantage is able to push the other to zero profit. You are trying to help GT Instruments in computing how much of the added value they can appropriate if they enter the market. GT Instruments is interested in achieving a return of at least 150% on its investment (return is the ratio (P-FC)/FC). (a) Complete the formulas in cells B30, C30, D30, E30 and F30 for GT Instruments using the values in the blue and yellow cells at the top of the file (cells C6-C8, F6-F8). Review the computation in the lecture notes for the maximum price that can be charged in a competitive market. The value in cell F30 should be "YES" or "NO