Question: A price taker on the final commodity market faces prices p = c. On the input side he behaves as a perfectly discriminating monopsonist on two distinct and separated markets. The input supply functions on each market are s1 = b1 + E1y1 and s2 = b2 + E2y2, respectively, where the Ei matrices are symmetric positive semidefinite, i = 1, 2. This entrepreneur uses a linear technology A to produce his output.
(a) Formulate the appropriate primal specification giving a meaningful interpretation to each component.
(b) Derive the dual problem and interpret each component.
(c) Restate the problem in an LCP structure.