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By itself, the upstream manufacturer cannot implement a price discrimination scheme against downstream consumers because downstream retailers can defeat it. To see this, suppose that home gardeners and farmers both use the same herbicide. Home gardeners are willing to pay $5 for a one-liter spray bottle ($5 per liter), whereas farmers are willing to pay $600 for a 200-liter barrel ($3 per liter).
If the manufacturer tries to price discriminate (by pricing at $5 per liter to home retailers and $3 per liter to farm retailers), the farm retailers could buy herbicide in 200-liter barrels, put it in a small spray bottles, and sell it to home gardeners. By vertically integrating into retail operations, the manufacturer can prevent this kind of arbitrage. Note that the manufacturer has to integrate only into low-price retailing to accomplish this.
Question: Suppose the herbicide manufacturer can vertically integrate only into home gardening retailing. Would this allow the manufacturer to price discriminate?
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Elucidate the importance of credibility when evaluating a firm's potential moves.
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Use scholarly sources to support the current debate between the White House and Congress regarding what measures are necessary to address spending and revenues (e.g., news reports, official statements, press conferences, as well as numerous governmen..
Economists argue about the potential benefits and cost of diversification. For example while diversification can certainly help company to promote new products at the same time through the merger of two firms it can be more expansive to develop commu..
Explain what will the total decrease in aggregate demand be as a result of the initial $12 billion decrease.
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