Question

Why are the prices typically imposed on a multi-product monopolist different from the price imposed on a single-product monopolist?

Answer 1

The different prices are imposed, because multi-product monopolists also use economy of scope, other than economy of scale that lead to reduction in overall ATC of the output. But, single product monopolist cannot apply economy of scope, making ATC to be higher. So, both the firms get different prices to be followed. Besides, multi-product monopolist exerts bigger market power in the market that is more strictly required to be controlled by the government, in comparison to the single product monopolist. So, both of these firms get different prices.

answered by: anonymous