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Further, Wingstop gets a higher demand as it is located closer to the Davis In Davis sell differentiated end-products, due to the different mix of spices they The total profit under collusion (monopoly profit) is more than what they wereĬollectively making in the Cournot outcome.ģ) Fire Wings (F) and WingStop (W), the two places offering chicken-wings Produce the monopoly output and then share the monopoly profits) Show that How much would Ser Bronn and Sandor produce together if they instead couldĪgree on a collusive outcome? (The collusive outcome is where firms together He would pay a fee that would make him indifferent between If Ser Bronn can pay a fee to the corrupt “Lord Protector of the Vale” (Lordīaelish) for exclusive rights to the market, what is the largest fee he wouldīe willing to pay to prevent entry? (Hint: Start by finding the monopoly andĭuopoly profits. Each sell-sword has a marginal cost of 15. Ser Bronn would like to deter entry however, he cannot commit Operate in this market, they would have to settle for Cournot duopoly outputsĪnd profits. Warrior who recently entered the kingdom, gets enticed by the promise of wealthĪnd becomes a potential entrant in this sell-sword business. Is the only sell-sword in the kingdom of Vale currently providing such services,Īnd is thus producing the monopoly output level. Q is the total number of Trials by Combat fought by sell-swords. The demand for sellsword services in the kingdom of Vale is p = 100=Q, where p is the price when |
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