WOLFRAM|DEMONSTRATIONS PROJECT

Nondiscriminating Monopolist with Two Independent Markets

This Demonstration studies an important case in industrial organization: how a nondiscriminating monopolist sets a uniform price in two independent markets. We get the total demand curve by "horizontal summation" of two independent linear demand curves, which arises because of the convention that for demand function
q(p)
, the dependent variable
q
is plotted along the horizontal axis. As a result, the monopolist faces a broken and discontinuous total marginal revenue curve
MR(q)
, which is a function of
q
. This shows the model's difference from the other important case of a discriminating monopolist.