Problem
Now suppose that U.S. American can buy their iphone from online Canadian retailers who can ship a phone to the U.S. The shipping fee is $50. How much should apple charge now for an iphone in the U.S? Show work.
But here is some guidance: to prevent arbitrage by third parties, Apple will need to reduce the price gap to 50, so Pu=Pc+50. Then write down the joint profit function. (Profit in the U.S plus profits in Canada) and optimize over the one.