Attempt all subparts 9.8 A pure monopolist on two distinct and separated final commoditymarkets faces prices pi = c – D¡x¡ and p2 = c2 – D2x2, respectively,where D; are asymmetric positive semidefinite matrices, i = 1, 2. Onthe input side he behaves as a perfectly discriminating monopsoniston two distinct and separated markets. The input supply functionson each market are sį = bị + E1yı and s2 = b2 + E2Y2, respectively,where the E; matrices are symmetric positive semidefinite, i = 1, 2.This entrepreneur uses a linear technology A to produce his output.The Monopsonist201(a) Formulate the appropriate primal specification, giving a meaning-ful interpretation to each component.(b) Derive the dual problem and interpret each component.(c) Restate the problem in an LCP structure.

A pure monopolist is a firm that is the only supplier in a market and has the ability to set prices…

(a) Formulate the appropriate primal specification, giving a meaning- ful interpretation to each component. (b) Derive the dual problem and interpret each component. (c) Restate the problem in an LCP structure.

(a) Formulate the appropriate primal specification, giving a meaning- ful interpretation to each component. (b) Derive the dual problem and interpret each component. (c) Restate the problem in an LCP structure.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.6P

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Question

Attempt all subparts

9.8 A pure monopolist on two distinct and separated final commodity
markets faces prices pi = c – D¡x¡ and p2 = c2 – D2x2, respectively,
where D; are asymmetric positive semidefinite matrices, i = 1, 2. On
the input side he behaves as a perfectly discriminating monopsonist
on two distinct and separated markets. The input supply functions
on each market are sį = bị + E1yı and s2 = b2 + E2Y2, respectively,
where the E; matrices are symmetric positive semidefinite, i = 1, 2.
This entrepreneur uses a linear technology A to produce his output.
The Monopsonist
201
(a) Formulate the appropriate primal specification, giving a meaning-
ful interpretation to each component.
(b) Derive the dual problem and interpret each component.
(c) Restate the problem in an LCP structure.

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