Question: Problem 1: Vertical Merger with Cournot Duopolists There are two tshirt sellers (Seller A and Seller B) outside of Fenway Park. They buy tshirts from

Problem 1: Vertical Merger with Cournot Duopolists There are two tshirt sellers (Seller A and Seller B) outside of Fenway Park. They buy tshirts from an upstream market where there are two manufacturers (Manufacturer 1 and Manufacturer 2). It costs $2 to manufacture a tshirt and demand for tshirts is P(Q) = 40 0.2Q. The tshirt seller's only marginal cost is the wholesale cost of the tshirt. (a) Would consumers be helped 0r harmed by a merger between Seller A and Manufac turer 1 if the new merged rm did not supply tshirts (foreclosed) to Seller B? (b) What is the forclosure ejjfect? In other words, how much worse OH is Seller 2 after the vertical merger between Seller 1 and Manufacturer A

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