Day 3 was a `midterm’ testing them on calculus prerequisites. Day 4, began with double marginalization. Analyzed the case when the upstream firm dictates wholesale price to the downstream firm. Subsequently, asked the class to consider the possibility that downstream firm dictates price to upstream firm. In this case `double marginalization’ disappears. Connected this pack to the power take it or leave it offers discussed day 1 and related this to Amazon vs Hachette. Concluded this portion with discussion of two part tariffs as alternative to merger to `solve’ double marginalization.
Double marginalization was followed by computing total consumer surplus by integrating the inverse demand function. Ended on optimal regulation of monopolist, showing that pricing at marginal cost maximizes producer plus consumer surplus. Brief discussion of incentives to be a monopolist if such regulation was in place. Then, asked the class to consider regulating a monopsonist and whether a minimum wage would be a good idea.