Copier Repairs When Kodak leased large photocopiers to ...

[NClaborn]

Copier Repairs When Kodak leased large photocopiers to businesses, they also bundled a maintenance contract for periodic repairs. Third-party repair firms claimed that Kodak violated antitrust laws because this bundle guaranteed Kodak a monopoly on repairs and excluded competitors' access. Why might the bundle have created value over what third-party repair shops could offer?

Question 2

Suppose the monopolist only sold the goods separately. What price will the monopolist charge for Good 2 to maximize revenues for good 2?
 a. 2,300
  b. 2,800
  c. 1,200
  d. 1,700

[ky860224]

Answer to Question 1

Kodak is worried that a poor quality repairman will blame his failure to fix a broken photocopier on a poor Kodak machine. Repairmen who experience unexpected difficulties would not want to reveal their own incompetence. Instead, they can claim to the customer that Kodak just produces poor equipment. A repairman who is a Kodak employee has no incentive to shift the blame.

Answer to Question 2

c

[NClaborn]

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[sultansheikh]

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