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Question on platform market (like mastercard, visa)




Question on platform market (like mastercard, visa);Consider a platform market. There are two sides of the market, with demand functions;q1(p1) = 300? p1;q2(p2) = 180?.5p2.;A monopoly firm serves this market and chooses p1 and p2. Assume that every person on side one uses the;platform to interact with every person on side two. Each such interaction generates p1 + p2 in revenue for;the firm. Each interaction also incurs a cost of 30 to the firm.;(a) Write the firm?s profit function using the above assumptions.;(b) Write the first order conditions that characterize the equilibrium. (There will be two);(c) Solve for equilibrium p1 and p2.;(d) Calculate the firm?s profit.


Paper#18230 | Written in 18-Jul-2015

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