HW5-Price Discrimination, Game Theory, Oligopoly

HW5-Price Discrimination, Game Theory, Oligopoly - EEP 100...

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EEP 100 Homework # 5 Perloff Due Tuesday April 20 Questions 1. As discussed in the “Google Advertising” application, advertisers on Google’s web site bid for the right for their ads to be posted when people search for certain phrases. Google’s “Traffic Estimator Tool” provides potential advertisers with a guide to the auction prices they would expect to pay for different keywords in different locations. The traffic estimator provides a range of prices that other advertisers have paid recently for an ad being in positions 1-3 in a certain city and the search volume associated with that price range. Should a firm that provides local services (such as plumbing or pest control) expect to pay more or less for an ad in a small town or a large city? Why? 2. Using the information in the “Botox Revisited” application, determine how much Allergan loses by being a single-price monopoly rather than a perfectly price- discriminating monopoly. Explain your answer.
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HW5-Price Discrimination, Game Theory, Oligopoly - EEP 100...

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