Changes
Jump to navigation
Jump to search
→Addendum
The last answer (Part II) might also have considered price discrimination more generally - price discrimination is not inherently bad (actually it can be welfare improving) and may lead to positive profits.
After consulting Ernesto about this answer the following corrections should be made:
*The battery life extension (from 4hr to 6hr) was supposed to be a vertical differentiation question. The application of a horizontal model would be wrong.
*The Red/White problem should have assumed that the innovator made their phone red (i.e. did not keep white).
**It is not clear that given the option to keep white would be exercised even if there where economies to scope. The economies would have to be sufficiently large to overcome the problem of competiting with yourself!
===References===
