Mon 29 Jul, 2013 01:26 pm
Innovator faces a demand curve p=1-q
Fixed and marginal cost are zero, except that one unit of the innovation rewuires as input one unit of good G
G is sold by monopolistiv supplier S; it is produced at zero cost
Assumption: S sets price p(supplier); innovator determines which quantity it buys at this price
What profit do innovator and supplier make?