(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.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.6P
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![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F91b7aa4f-24d5-4d1b-b882-cb2f5550ee89%2Fee65138e-a4c6-4831-be4b-20d69cd8e3f3%2Ff0laxse_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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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