In the model of horizontal product differentiation, an extra store was found to be socially desirable providedn(n+1) <tN/4F, wherenis number of stores,Nis number of consumers,tis travel cost andFis fixed cost.Also, adding an extra store is profitable for the price-discriminating monopolist providedn(n+1) <tN/4F.Together, these results imply the monopolist has

Select one:

a.

too many stores

b.

too few stores

c.

exactly the optimal number of stores

d.

can't tell without knowing marginal costs