Explain the problem encountered by successive monopolies? How can ...

[nmorano1]

Explain the problem encountered by successive monopolies? How can the supplier and the producer overcome this problem?

Question 2

It is always the best strategy to
 A) not always be the first mover.
  B) be the first mover.
  C) never innovate.
  D) to seek accounting profits.

[karmakat49]

Answer to Question 1

Successive monopolies face the problem of double marginalization whereby the joint profits of the firms are lower if they operate independently than if they cooperate. They can solve the problem by merging or devising a contract. Under such an agreement the producer would agree to transfer a portion of his/her profit to the supplier.

Answer to Question 2

A