Sonia Music Entertainment (SME) is an American company that holds copyrights of popular songs. Consider a supply chain w
Posted: Fri May 20, 2022 6:21 am
Sonia Music Entertainment (SME) is an American company that
holds copyrights of popular songs. Consider a supply chain where
SME sells songs toiTones 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 totall supply chain profit, ie. the
sum of the profits for SME and iTunes is $X
2) SME and iTones merge into a single firm, The profit of the
integrated firmis $Y,
What is Y-X?
A. 10
B. 15
C. 25
D. 45
E. 30
holds copyrights of popular songs. Consider a supply chain where
SME sells songs toiTones 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 totall supply chain profit, ie. the
sum of the profits for SME and iTunes is $X
2) SME and iTones merge into a single firm, The profit of the
integrated firmis $Y,
What is Y-X?
A. 10
B. 15
C. 25
D. 45
E. 30