MultiproductMonopoly

# MultiproductMonopoly - that we have consumers spread over a...

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A MultiProduct Monopolist Consumer Reservation Price: V = \$10.00 Transport costs per mile: t = \$10.00 Number of Consumers: N = 100 Marginal Production Costs: c = \$2.00 Fixed Costs per Shop: F = \$50.00 Net Profit 1 0.500 5.000 6.000 \$4.00 80 320.000 0 \$320.00 2 0.250 2.500 7.500 \$5.50 100 550.000 \$100.00 \$450.00 3 0.167 1.667 8.333 \$6.33 100 633.333 \$150.00 \$483.33 4 0.125 1.250 8.750 \$6.75 100 675.000 \$200.00 \$475.00 5 0.100 1.000 9.000 \$7.00 100 700.000 \$250.00 \$450.00 This spreadsheet allows us to calculate the optimal number of products that a multiproduct monopolist will want to offer. The idea is
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Unformatted text preview: that we have consumers spread over a spatial market and the firm has to decide how many shops to establish. Consumers buy exactly one unit of the good provided that the price plus transport costs is less than the consumer's reservation price. The market is assumed to be one mile long. Number of Shops Distance from the Most Distant Consumer Transport Cost to the Most Distant Consumer Price to be Charged Profit per Unit Number of Consumers Aggregate Profit Fixed Costs...
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