Cambridge university Study guides, Class notes & Summaries

Exercise 1 Monopoly with quality choice Consider a monopolist who sells batteries. Each battery works for h hours and then needs to be replaced. Therefore, if a consumer buys q batteries, he gets H = qh hours of operation. Assume that the demand for batteries can be derived from the preferences of a representative consumer whose indirect utility function is v = u(H) pq, where p is the price of a battery. Suppose that u is strictly increasing and strictly concave. The cost of producing bat...

Exercise 1 Horizontal product di§erentiation1 [included in 2nd edition of the book] Hong Kong Island features steep, hilly terrain, as well as hot and humid weather. Travelling up and down the slopes therefore causes problems; this has led the city authorities to imagine rather unusual methods of transport. One famous example can be found in the Western District, where one of the busiest commercial area of Hong Kong can be found. This area stretches from Des Voeux Road in Central (which...

Exercise 1 Geographical pricing [included in 2nd edition of the book] "Purple Dream"has the monopoly on the production of purple light-emitting diodes (LEDs). It faces geographically separated markets, market 1 and 2. The demands are qA = 1 pA and qB = 1=2 pB, respectively. The transport and production costs are set to zero. 1. Assume that the Örm chooses to set a uniform price across the two markets. What is the proÖt maximizing uniform price? What are the quantities sold on the tw...

Exercise 1 Industries with cartels Brieáy describe and analyze a case of your choice concerning a price- or quantity-Öxing cartel (please not OPEC). The following questions may be useful to bear in mind: What are the relevant characteristics of the industry? What was the scope of the cartel? How was the cartel enforced? What were the e§ects of the cartels? How did the competition authority or court argue and what was the decision, if any? Exercise 2 Collusion and pricing Two (advertis...

Exercise 1 Industries with cartels Brieáy describe and analyze a case of your choice concerning a price- or quantity-Öxing cartel (please not OPEC). The following questions may be useful to bear in mind: What are the relevant characteristics of the industry? What was the scope of the cartel? How was the cartel enforced? What were the e§ects of the cartels? How did the competition authority or court argue and what was the decision, if any? Exercise 2 Collusion and pricing Two (advertis...

Exercise 1 Geographical pricing [included in 2nd edition of the book] "Purple Dream"has the monopoly on the production of purple light-emitting diodes (LEDs). It faces geographically separated markets, market 1 and 2. The demands are qA = 1 pA and qB = 1=2 pB, respectively. The transport and production costs are set to zero. 1. Assume that the Örm chooses to set a uniform price across the two markets. What is the proÖt maximizing uniform price? What are the quantities sold on the tw...

Consider a monopolist who sells batteries. Each battery works for h hours and then needs to be replaced. Therefore, if a consumer buys q batteries, he gets H = qh hours of operation. Assume that the demand for batteries can be derived from the preferences of a representative consumer whose indirect utility function is v = u(H) pq, where p is the price of a battery. Suppose that u is strictly increasing and strictly concave. The cost of producing batteries is C(q) = qc(h), where c is stric...

Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part II. Market power Exercises & Solutions Industrial Organization: Markets and Strategies Paul Belleáamme and Martin Peitz published by Cambridge University Press Part II. Market power Exercises & Solutions Exercise 1 Monopoly with quality choice Consider a monopolist who sells batteries. Each battery works for h hours and then needs to be replaced. Therefore, i...

Exercise 1 Horizontal product di§erentiation1 [included in 2nd edition of the book] Hong Kong Island features steep, hilly terrain, as well as hot and humid weather. Travelling up and down the slopes therefore causes problems; this has led the city authorities to imagine rather unusual methods of transport. One famous example can be found in the Western District, where one of the busiest commercial area of Hong Kong can be found. This area stretches from Des Voeux Road in Central (which...

Exercise 1 Industries with cartels Brieáy describe and analyze a case of your choice concerning a price- or quantity-Öxing cartel (please not OPEC). The following questions may be useful to bear in mind: What are the relevant characteristics of the industry? What was the scope of the cartel? How was the cartel enforced? What were the e§ects of the cartels? How did the competition authority or court argue and what was the decision, if any? Exercise 2 Collusion and pricing Two (advertis...