Question: A discriminating monopolist produces the output vector x with a single technology A and plant b and faces the opportunity of two distinct markets in which to sell her three or more products. Markets 1 and 2 are represented by the inverse demandfunctions p1 = c1 - D1x1 and p2 = c2 - D2x2, respectively, where D1 and D2 are asymmetric positive semidefinite matrices.
(a) Set up the appropriate primal specification for this entrepreneur assuming that she wishes to maximize profits. Explain every component of the primal problem.
(b) Derive the dual problem and give a complete economic interpretation.