Asked by Jumol Johnson on Sep 24, 2024
Verified
In the problem of double marginalization,the resulting price is lower than if
A) The manufacturer were to sell directly to the consumer
B) The manufacturer and the retailer were to merge
C) All of the above
D) None of the above
Double Marginalization
A situation where both the upstream and downstream firms in a supply chain exert market power, leading to higher prices for consumers.
Directly to Consumer
A business model where companies sell their products directly to consumers, bypassing traditional retailers, wholesalers, or other middlemen.
Resulting Price
A price that emerges from the interaction of supply and demand factors within a specific market environment.
- Recognize the factors leading to and the outcomes stemming from double marginalization.
Verified Answer
PP
plooo plumm2 days ago
Final Answer :
D
Explanation :
In the problem of double marginalization, the resulting price is typically higher, not lower, than if the manufacturer were to sell directly to the consumer or if the manufacturer and retailer were to merge. This is because both the manufacturer and the retailer add their own markup to the product's price, leading to a higher final price for the consumer.
Learning Objectives
- Recognize the factors leading to and the outcomes stemming from double marginalization.