Find the price paid by each market (e.g., buyers, retailers, upstream 1&2) for the following...
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Accounting
Find the price paid by each market (e.g., buyers, retailers, upstream 1&2) for the following industry with two upstream layers of firms, each with monopoly power. And find the deadweight loss in the overall market and compare this to the deadweight loss when there are no upstream layers.
(Inverse) Demand: P=500-Q/4
MC=0 for all firms
a.) Suppose the government regulates the upstream market such that products are supplied at costs to retailers. Find the equilibrium price and quantity traded for each market layer.
b.) Suppose the government only regulates the second upstream market such that they supply the first upstream firm at costs. Find the equilibrium price and quantity for each market layer.
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