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| Topic: |
Technology
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| Number of pages / Number of words: |
3 / 767 |
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Let’s say it took 24 hours of work for a consumer to switch in a world without number portability. However, after number portability kicks in, it takes only one hour to switch. Assume that the consumer makes $20 per hour. The monthly discount rate is 1%. Assume that the industry is highly competitive...
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Assume that the industry is highly competitive. Calculate the price that can be charged before and after number portability.
Price before number portability = marginal cost + switching cost / (1 + 1/r) = 30 + 24*20/ (1 + 1/.01) = $34.75
After number portability, price = 30 + 1*20/ (1 + 1/.01) = $30...
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