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Your computer needs an operating system (OS; price P1) and application software (App; price P2). The demand for the combination is given by Q = 600 -…

by | Nov 29, 2023 | economics

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Your computer needs an operating system (OS; price P1) and application software (App; price P2). The demand for the combination is given by Q = 600 – 20P, where P = P1 + P2. The marginal costs are zero.

a. Find the optimal price and quantity if the OS and App are provided by separate firms.

b. Find the optimal price and quantity if the OS and App are provided by a single integrated

firm.

c. What broader conclusion do you draw from your answers to a. and b.?

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