Consider Product Network Effects Consumers Named Using Real Numbers 0 1 Reservation Price Q37243703

Consider a product that has network effects. Consumers are namedusing real numbers between 0 and 1; the reservation price forconsumer x when a z fraction of the population uses the product isgiven by the formula r(x)f(z), where r(x) = 1 − x and f(z) = z.

(a) Let us suppose that this good is sold at cost 1/4 to anyconsumer who wants to buy a unit. What are the possible equilibriumnumber of purchasers of the good?

(b) Suppose that the cost falls to 2/9 and that the good is soldat this cost to any consumer who wants to buy a unit. What

OR
OR

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.