managerial ecomn responses

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Pat paper1 Research study suggested on “Transfer pricing with no market for intermediate product” there is no doubt to believe the possibility in the chart of Table 10.9 the equilibrium of price will be the same despite environment market difference. Whereas, the product C will sell immediately as the same producing A in a division marketplace; whereas, both products are identical in competitive business perspective (Keat, Young Philip, & Erfle, 2014, p. 447). Hence, the universal standard for opportunities doing business in the global market will generate highly positive externalities of the kind key factors often affect customers’ demand for a product referred to the challenges of estimating benefits in return to the company.

It is evident also there will be three key factors affect the price in the central external market perspective. For example, in the externality market, both companies benefit possibly with different intensities their products based on increasing size of one from decreasing size of the other, and ameliorating taste by putting more ingredients from one to the other or leave it as it is. In fact, the three key factors following as:

  1. Point where the marginal cost equals to the marketplace price.
  2. The cost of the intermediate product can divide within the market price.
  3. There is production in supply demand of the total marginal cost equal to the marginal revenue of final product.

Thus, the externalities associated with the education of the customers about their products formatting a circulation of meaning original objective message to communicate effectively on the approach to stop all the barriers customer may have as concerned to buy or to use their products versus contenders (Keat et al., 2014, p. 538). For instance, researchers believed circulation of meaningful information upon education to the customers within the digital paradigm is possible to the notion of expression externalities and are also active together to stimulate and promote third parties affectation in the original private transaction (Bomsel, 2013).

Third parties approach model will be when externality focuses on symmetric equilibrium price, and the total marginal cost equal to the marginal revenue of final product satisfies itself homogeneity condition to the platforms’ profits in price structures (Bardey, Cremer, & Lozachmeur, 2014). Therefore, the price will not affect the product in such way that variation of size, taste, and some ingredients are different transfer to the need of consumers keep on buying their product in the first rank. Because in the particular perspective business, a realistic case where the standard externality is homogeneous of degree zero to the company getting result profits differs, from those of the two-sided models depend on the intensity of the key factors such company used (Bardey et al., 2014).


Bardey, D., Cremer, H., & Lozachmeur, J. (2014). Competition in two-sided markets with common network externalities. Review of Industrial Organization, 44(4), 327-345. doi:10.1007/s11151-013-9416-6

Bomsel, O. P. (2013). Copyright and brands in the digital age: internalizing the externalities of meaning. Contemporary Economic Policy, 31(1), 126-134. doi:10.1111/j.1465-7287.2011.


Keat, P. G., Young Philip, K. Y., & Erfle, S. E. (2014). Managerial economics. Economic Tolls for Today’s Decision Makers (7th ed.). Pearson Education Limited

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