3. Consider the market for a given piece of hardware – a photocopier of brand x, for example – that needs after-sale ser

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3 Consider The Market For A Given Piece Of Hardware A Photocopier Of Brand X For Example That Needs After Sale Ser 1 (78.64 KiB) Viewed 33 times

3. Consider the market for a given piece of hardware – a photocopier of brand x, for example – that needs after-sale servicing. Suppose that there is free entry into this after market. Servicing photocopiers implies a fixed cost of F and a marginal cost of c. X, where x is the number of units serviced. Total demand for servicing is given by D = Sa - p), where p is price and S the number of photocopier owners. Finally, suppose that firms in the after market compete a` la Cournot. Find the equilibrium number of firms in the after-market. b. Find the consumer surplus in the aftermarket. c. Relate this result to the discussion on indirect network externalities. a.