In this lecture we finish last week’s analysis of price discrimination by looking at some cases in which price discrimination actually reduces profits.

We go on to analyse horizontal product differentiation models, which are models in which different consumers prefer different goods.

I don’t really understand slide 18 of this lecture. – With the FOC for A, I don’t understand where the -PA/2t comes from. Can you help / explain, please? Thanks.

We’re applying the product rule to the expression for firm A’s profits. The term you mention is what you get when you multiply pA with the derivative of the term in brackets.

I thought I understood the Hotelling Model, but then I saw slide 23. – Why is it x*-b and not b-x*?

It doesn’t make any difference as (x-b)^2 = (b-x)^2.