Page 29 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 1, 2023, pp. 21-34

1

2

2
− ( ) − F − γ ≥ (2 − )( ) − 2 + − s + s B −
2
− (7)
By simplification and solving of equation (7) is becomes clear that:

2
2 ( ) + (1 − − 2 ) − ( − 1)
≥ 2
− 1

Second state: Launching a sale agent at city center or several agents at margin
areas
Now, this question arises that whether the manufacturer gives permit to one sale agent
at city center or several sale agents at margins? It seems that the irrecoverable costs
should be an important factor in launching sale agents and the following theorem will
confirm it.

Theorem 2
The presence of a sale agent at city center for monopolist is more profitable than the
presence of several sale agents (K) in margins if:

2
2 ( ) + ( − − 2 ) − ( − 1)
≥ 2
− 1

Proof: Beforehand, we know that if there is just one sale agent at city center, then
based on equation (3) the monopolist profit is equal to:

2
M

M
π = ( − ) p = − ( ) − F − γ

Now, assume that the monopolist has several sale agents (K) in various streets. Here,
as far as K sale agents sell their products to the consumers at the same streets and there
1
D
are n consumers in each street that in case of purchase will have a surplus of p + −
2
B and the rest S-K streets have no sale agents, the consumers will have a surplus of
1
D
B − − p in case of purchase, therefore, the profit of sale agents will be equal to:
2

K
−
M

M
D

D
Π = ∑ π = [ ̂ ( − p ) + ̂ ( − p )] − KF = Kγ
i

i=1
D 1 M − 1 D M
⇒ [ (p + − B) ( − p ) + (B − − p ) ( − p )] − KF = Kγ (8)
2 2

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