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Consider a market in which consumption of the good being traded generates a positive externality. There are 100 identical consu...Asked by Nick
Consider a market in which consumption of the good being traded generates a positive externality.
There are 100 identical consumers, each with a utility function given by 1/2√q+m+√G, where G denotes the total level of consumption in the market.
The good is sold by competitive firms that produce with a constant marginal cost of 1 $/unit.
now assume that the good is sold by a monopolist that produces using the same technology.
QUESTION: In this case, what is the difference between the optimal level of total consumption and the level of total consumption in equilibrium?
There are 100 identical consumers, each with a utility function given by 1/2√q+m+√G, where G denotes the total level of consumption in the market.
The good is sold by competitive firms that produce with a constant marginal cost of 1 $/unit.
now assume that the good is sold by a monopolist that produces using the same technology.
QUESTION: In this case, what is the difference between the optimal level of total consumption and the level of total consumption in equilibrium?
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