Unformatted text preview: buying in the second), and θ (the marginal consumer indifferent between buying in the second and not buying at all.) Warning! – you may be violating an implicit constraint (chances are, you are.) Find out what implicit constraint is being broken, then impose the constraint and solve again. iii. Find q1, p1, q2, and p2. b. Assuming that the monopolist cannot commit to a second period price, find θ 1 , θ 2 , q 1 , p 1 , q 2 , and p 2 . Which outcome does the monopolist prefer, that of part a. or part b.? c. Repeat parts a. and b. but assuming that the utility to a consumer is u = 3θ- p 1 if she purchases in period 1, u = θ - p 2 if she purchases in period 2, 0 if she does not buy, and MC = 0. (This is someone who gets extra value from owning something brand new.)...
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- Fall '10
- Economics, San Diego, California San Diego, Professor Michael Noel, implicit constraint, Michael Noel University of California