Pricing Practices of A Monopolist Questions

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1. Answer all parts (a) – (f).
Suppose a regulator oversees the pricing practices of a monopolist who sells an identical good in
more than one market.
[5 marks] Why would the regulator be concerned about the ability of consumers to resell the
[10 marks] If a regulator’s only power is the ability to make the monopolist charge the same
price across all markets, why might the regulator choose to impose a uniform price? [The alternative
is to allow the monopolist to choose different prices in the different markets.]
[10 marks] If the regulator’s powers are enhanced so the regulator can now set separate
prices in each market, why would the regulator prefer to set different prices in each market rather
than setting a uniform price across all markets?
Now consider an upstream monopolistic manufacturer who agrees a deal with a downstream
monopolist retailer that stipulates a variety of restrictions on the retailer.
[10 marks] What impact is this vertical restraint likely to have on the price charged to
[10 marks] What impact is this vertical restraint likely to have on service provisions for the
[5 marks] What additional regulatory concerns arise if the manufacturer has similar
constraints with other retailers in competing markets?

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Explanation & Answer:
6 Questions


Pricing Practices

competing markets

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