Answer Happy

Sonia Music Entertainment (SME) is an American company that holds copyrights of popular songs. Consider a supply chain where SME sells songs to iTones at price $w, which in turn sells songs to customers at price $p. The demand for the song is not random, but is sensitive to price, given by D(p) = 240-120p. Consider two scenarios as follows: (1) SME and iTones sign on a wholesale price contract, where the two firms make isolated decisions; that is, SME first determines $w to maximize its own profit and then iTunes sets $p to maximize its own profit. The total supply chain profit, i.e., the sum of the profits for SME and iTunes, is $X. (ii) SME and iTones merge into a single firm. The profit of the integrated firm is $Y. What is Y - X? 10 o 15 O 25 o 45 O 30