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Figure 7 shows the activity levels at which the total welfare, consumer surplus and industry profit are maximized for different sizes of the symmetric networks.
Figure 7 The maximum total welfare, consumer surplus and industry profit for different sizes of symmetric networks (pmb{3leq nleq 30}).
The aim is to characterize a vector P q) of policy-functions and a vector q of decision profiles, which optimize an objective-function (e.g. social welfare, consumer surplus, profit, pay-off, etc).
If the total welfare, consumer surplus and industry profit are maximized at (k_{mathit{TW}}), (k_{mathit{CS}}) and (k_{Pi}), respectively then with respect to the network size n, 1. (k_{Pi} = k_{mathit{TW}} = k_{mathit{CS}} = n-1) if goods are independent; 2.
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However, all these equilibria are equivalent in terms of social welfare and consumer surplus.
However, when compared to a (V) merger, social welfare and consumer surplus always decrease.
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