respectively. 1. Until question 5, we consider a "feebate" or "Clean Car Discount". That generally means there would be a subsidy on the purchase of some cars, and a tax on others, but in the following analysis it will be possible to have taxes on both or subsidies on both. In the current question, assume that there are two monopolies, one for type 0 cars and one for type 1 cars. Mathematically, this is equivalent to a Cournot duopoly with differentiated goods. (a) Let type 0 cars be taxed at To = 20 per car sold, and type 1 cars be subsidised at 20 per car. To keep the notation consistent between the two types, this subsidy will be represented as a negative tax: 71 = -20. The profits of the monopolist for type 0 cars are (250 – 50 – 20 – Qo – Q1/2)Qo. Write down an expression for profits of the monopolist selling type 1 cars.

respectively. 1. Until question 5, we consider a "feebate" or "Clean Car Discount". That generally means there would be a subsidy on the purchase of some cars, and a tax on others, but in the following analysis it will be possible to have taxes on both or subsidies on both. In the current question, assume that there are two monopolies, one for type 0 cars and one for type 1 cars. Mathematically, this is equivalent to a Cournot duopoly with differentiated goods. (a) Let type 0 cars be taxed at To = 20 per car sold, and type 1 cars be subsidised at 20 per car. To keep the notation consistent between the two types, this subsidy will be represented as a negative tax: 71 = -20. The profits of the monopolist for type 0 cars are (250 – 50 – 20 – Qo – Q1/2)Qo. Write down an expression for profits of the monopolist selling type 1 cars.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2.2CE

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