Suppose now that the publisher in Question 4 6 faces a
Suppose now that the publisher in Question 4.6 faces a downward- sloping demand curve. The revenue is R(Q), and the publisher’s cost of printing and distributing the book is C(Q). Compare the equilibria for the following compensation methods in which the author receives the same total compensation from each method:
a. The author is paid a lump sum, +.
b. The author is paid a share of the revenue.
c. The author receives a lump-sum payment and a share of the revenue. Why do you think that authors are usually paid a share of revenue?

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help