Discriminating Monopolist with Two Independent Markets
Discriminating Monopolist with Two Independent Markets
This Demonstration studies an important case in industrial organization: how a discriminating monopolist sets prices in two independent markets. The discriminating monopolist faces a broken curve that we call , which is a result of "horizontal summation" of the marginal revenue functions of both markets. The monopolist sets prices from the condition . This model differs from the important case of nondiscriminating monopoly, with a broken and discontinuous total marginal revenue curve derived from a broken total demand curve. Understanding the difference between and is essential to understanding the models.
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