In the nonlinear price discrimination analysis in panel a of Figure, suppose that the monopoly can make consumers a take- it-or-leave-it offer.
a. Suppose the monopoly sets a price, p*, and a minimum quantity, Q*, that a consumer must pay to be able to purchase any units at all. What price and minimum quantity should it set to achieve the same outcome as it would if it perfectly price discriminated?
b. Now suppose the monopolist charges a price of $ 90 for the first 30 units and a price of $ 30 for all subsequent units, but requires that a consumer must buy at least 30 units to be allowed to buy any. Compare this outcome to the one in part a and to the perfectly price- discriminating outcome.

  • CreatedNovember 13, 2014
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