Determine the optimal price for each sub-group, Financial Accounting

The objective is to assess the incentive to acquire information on consumer characteristics. We consider a monopoly. The firm incurs no production cost. There are M consumers with unit demand. Consumers' valuation for that good, denoted v, is uniformly distributed on the interval [0, 1] . A consumer with a valuation v buys the good if and only if the price for the good p is lower than v (p ≤ v). The firm a priori does not observe the valuation v. Nevertheless the monopoly has the possibility to acquire information, which will lead to a partition of the consumers into N subintervals of equal length. For instance if N = 2, the monopoly knows whether a consumer has a valuation in the interval [0,1/2] or [1/2,/1] and can set two different prices for each sub-group.

1. Determine the optimal price for each sub-group.

2. Deduce the profit of the monopoly. Is there a benefit to invest in information acquisition for the monopoly?

 

 

Posted Date: 4/2/2013 4:12:31 AM | Location : United States







Related Discussions:- Determine the optimal price for each sub-group, Assignment Help, Ask Question on Determine the optimal price for each sub-group, Get Answer, Expert's Help, Determine the optimal price for each sub-group Discussions

Write discussion on Determine the optimal price for each sub-group
Your posts are moderated
Related Questions
In this method the minimum and maximum level for all items of inventory are fixed. These levels function as an origin for initiating action so that the quantity of all items is con

The Operating Cycle Two Wheeler Cycle Shop buys all of its bikes from one manufacturer, Baxter Bikes. On average, bikes are on hand for 45 days before Two Wheeler sells them. The c

Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,728,224.

A 4 year project has an initial asset investment of 306600, and initial net working capital investment of 29200, and an annual operating cash flow of -46720. The fixed asset is ful

a) A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 8%. Suppose that the liquidity premium on the corporate bond is 0.4%. What is

Q. Show the nature of business operations? The nature of business operations that influences the proportion of fixed costs to total costs. Capital intensive business operations

Emily Jackson, RSC Designs management accountant, is in charge of preparing the master budget for 2013.  She has gathered the following information: 1. Annual profit for the 201

Sundry Matters 1) The accounting system is also appropriate for departmental accounts. 2) The branch stock account is a practical means of controlling stock at the branch.

Alta Velocidad Esperanza de L'Argentina, Sociedad Anónima (AVE), a high-speed railway operator domiciled in Rio Norte, Argentina, is a Foreign Private Issuer as defined by the U.S.

I have an assignment due in four hours. Is it possible to get an inquiry if at least half of it can be done within that time?