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4 pages/β‰ˆ1100 words
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Style:
APA
Subject:
Mathematics & Economics
Type:
Math Problem
Language:
English (U.S.)
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Homework problem set. Mathematics & Economics. Math Problem.

Math Problem Instructions:

Essay Questions
For some questions in this part, there may be no definite correct answers for this part. Make
your own logical arguments to support your answers.
1. As covered in Chapter 8, an essential facility is an input controlled by a monopolist that is
essential to competitors and is effectively infeasible for competitors to duplicate. The
essential facilities doctrine is that the monopolist must share those resources with their
competitors on reasonable terms.
a. Do you think Google’s search engine is an essential facility? (Address this question in
the context of online retailing, where the competitors are vertical search engines.)
b. If Google is an essential facility, how would you apply the essential facilities doctrine?
2. In the context of the duopoly model of competition with network effects we covered in
class, consider firms’ prices prior to any firm becoming dominant. Address how a firm’s
dynamically optimal price would respond to each of the following situations.
a. Consumer demand is expected to grow faster.
b. A firm’s discount factor is reduced (so that it values future profits less)
c. A superior product is discovered, which is currently in the development stage. Once it
hits the market in a few years, the current products will be obsolete.
d. Future antitrust enforcement is anticipated to be weaker, so anticompetitive conduct is
less likely to be prosecuted.
3. Consider a two-sided platform that matches men and women who are interested in finding
a marriage partner. The platform sets a price for men to access the platform and a price for
women to access the platform. There prices are chosen to maximize the platform’s profits.
Assume the platform is the only one in the market.
a. What determines which gender pays a higher price?
b. Suppose a massive immigration wave occurs that increases the fraction of young men
in the population relative to young women. How will this affect the male and female
prices on the platform?
c. Suppose the value of marrying exogenously increased for men, while the value of
marrying for women was unchanged. Hence, in terms of Figure 9.9 (p.409) in the
textbook, the benefit curve rises for men and is unchanged for women. What will
happen to the price for men to access the platform? What about the price for women to
access the platform?
4. Provide as many reasons as you can (at least three) for why the dynamically optimal price
for a firm could be below its marginal cost.

Math Problem Sample Content Preview:

Homework Problem Set
Name Course Instructor Date
Essay QuestionsFor some questions in this part, there may be no definite correct answers for this part. Make your own logical arguments to support your answers.
the decisions of users in one group a
1. As covered in Chapter 8, an essential facility is an input controlled by a monopolist that is essential to competitors and is effectively infeasible for competitors to duplicate. The essential facilities doctrine is that the monopolist must share those resources with their competitors on reasonable terms.a. Do you think Google’s search engine is an essential facility? (Address this question inthe context of online retailing, where the competitors are vertical search engines.)
Google is the dominant search engine that fails to offer fair, reasonable and nondiscriminatory terms for the users and the competitors. As such, it is an essential facility even as there are smaller competitors in online searches. There are different search engines than Google, but Google influences what information and content that the users’ access and the company tries to foreclose competition to remain the dominant player. The vertical search engines are niche or single-purpose engines, and in online retail, they still need to be visible form Google to be useful to the users.
b. If Google is an essential facility, how would you apply the essential facilities doctrine?
Google is popular and not indispensable, but the platform controls consumers' access to online information and using the antitrust laws, Google should be allowed to deal with competitors as it is an essential facility. Furthermore, it is difficult to duplicate Google’s operations Google as an essential facility that monopolizes internet search, digital content and access to online information.
2. In the context of the duopoly model of competition with network effects we covered in class, consider firms’ prices prior to any firm becoming dominant. Address how a firm’s dynamically optimal price would respond to each of the following situations.
a. Consumer demand is expected to grow faster.
Dynamic price optimization (dynamic pricing) allows the networks to set prices based on preferences and needs. Networks to set prices are based on preference and needs and they can increase prices since prices increase with growing consumer demand.
b. A firm’s discount factor is reduced (so that it values future profits less)
As prices decrease there is growth in demand for the network services, and the consumers prefer this over the rival if they offer similar quality of services. However, a firm’s installed base influences its competitiveness in a duopoly
c. A superior product is discovered, which is currently in the development stage. Once ithits the market in a few years, the current products will be obsolete. When a superior product is discovered the duopoly can utilize typing to influence the buyers to use products...
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