A monopolist faces the market demand, P = 4 - Q. The (total) cost of production is 2Q + Q2.
(a) Find the profit-maximizing output and price for the monopolist.
(b) The patent holder licenses two product market rivals and charges a royalty fee B. Find the optimal total output in this case. Discuss the effect of an increase in B on optimal quantities.
(c) If B = 1/3 , what is the maximum fixed fee F that each licensee can pay?