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Why are the wholesale prices lower? When a wholesaler's demand curve is larger, according to standard economic theory, the associated equilibrium price should be higher, not lower. This book begins by using the Walras general equilibrium to translate the higher theoretical wholesale price into a lower real one. This is the first explanation.
Next, this book uses production capacity - which derives a pricing function - to explain. This explanation goes beyond supply and demand but guarantees a fixed profit to the supplier.
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