Example: Fiat makes Uno and Ferrari’s.

t

p1/Uno

Plant 2

Plant 1

p1/F500

p2/F20

p2/Uno

r2/F20

r2/Uno

r1/Uno

r2/F500

s

r2

cost

cap

0

supply of plant

production cost

max production

shipping cost

capacity imposed

by dist’n channel

model demand

0

t

Retailer demand

0

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