in the exercise below the quality is the same in both arrangements. In the above vertical-differentiation model, Exercise 2.2 let 0 be uniformly distributed on [0, 1. The cost func- tion is -) Cs Clq.s) (i) Check that, at a given, I P.(x,s)dx> P,(q, s). Jo (ii) Show that, when the difference in output is taken account of, the monopoly and the social planner choose the same quality An Example of "Overprovision" of Quality A consumer with "type" 0 has utility ( -0)s- p if he purchases the good and utility 0 otherwise. The parameter 0 is distributed on (0, al. Consider the situation where consumers enjoy the good per se (i.e., get utility from it) and also enjoy some extra services s P,(q, s). Jo (ii) Show that, when the difference in output is taken account of, the monopoly and the social planner choose the same quality An Example of "Overprovision" of Quality A consumer with "type" 0 has utility ( -0)s- p if he purchases the good and utility 0 otherwise. The parameter 0 is distributed on (0, al. Consider the situation where consumers enjoy the good per se (i.e., get utility from it) and also enjoy some extra services s