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

Question

​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

Quizplus · Accepted Answer

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.

​In the Problem of Double Marginalization,the Resulting Price Is Lower

In the Problem of Double Marginalization,the Resulting Price Is Lower