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To: Wildstar who wrote (324)	11/30/2003 5:12:20 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 445

Wildstar, [Yes. We need to keep in mind here that we are talking about all costs being either sunk or non-interfering with the achievement of the PEAK price. The 'various reasons' of which I am currently aware would include a marginal cost of replacement above the PEAK price and a limitation of available supply that would not satisfy the amount demanded at the PEAK price.] Can you further explain what you mean by 'cost of replacement'? If you're selling a specific lot of widgets, the lot is either the last lot that will be made or there will be another one made. If it is the last lot to be made, then all costs are sunk and the marginal cost has no bearing on how you price it to sell. If the lot will be replaced, then it will be the marginal replacement cost that will determine how much much the revenue maximizing price will be increased. It has something to do with it not making sense to sell a product at a relatively disadvantageous price when I can avoid the replacement cost by keeping it. Historically, in many cases, you have been able to find a clearer set of words to describe what I' m trying to say. I suspect that this may be one of those cases. Regards, Don

To: Wildstar who wrote (324)	11/30/2003 5:20:23 PM
From: Don Lloyd	Respond to of 445

Wildstar, {There is a question as to whether it is the seller of the consumer product or the supplier of the SFOP that is effectively the monopolist and who reaps the profits. Different cases may be different.} How is the supplier of the SFOP a monopolist? There can be many suppliers of the SFOP. There can be many suppliers OR many consumer sellers OR neither. There can be no consumer seller unless an SFOP supplier is willing to sell it to him. See MES on SFOP suppliers in the Monopoly chapter. Regards, Don

To: Wildstar who wrote (324)	11/30/2003 5:25:16 PM
From: Don Lloyd	Respond to of 445

Wildstar, [[[[Since the price of the NFOP is set by other buyers, the only real bargaining power the monopoly consumer good supplier has is in the buying of the SFOP.]]]] [I think that the emphasis is backwards here. There is no need to bargain for a NFOP because it generally already has a lower price than it needs to have. The alternate uses of the NFOP will usually provide it at a bargain price.] What is the backwardness? That the relatively low price of the NFOP already exists, and does not need to be bargained for by the monopoly supplier? Yes, the word 'only' sounds significant, but it's not. Regards, Don