8.1. Independent Firms The downstream firm's problem is max(a-bxc-wT The upstream firm's problem is max(a-2b)3-cr The output is 8.2. Integrated Firm Suppose now that the two firms merge into one firm. This firms problem is max(a-by)y
1. Asymmetric auctions Consider an interdependent-values auction with two bidders, each of whom observes an i.i.d uniform signal s; E [ 0, 1]. Bidder i' s valuation for the object is equal to