Botswana and South Africa both produce laptops. Botswana produces the Lenovo brand whereas South Africa produces the Acer brand. The demand and supply structure in both countries are given by the Dixit-Stiglitz model, with an elasticity of substitution equal to two in both countries. Assume that the laptop market in Botswana is much large than in South Africa. In both countries, the marginal labour input requirement is one and the fixed labour input per variety is 2.5. Botswana's labour employment in the cell phone industry is 20 million people whereas that of South Africa is 10 million people. Determine the number of varieties that will be supplied to Botswana and South Africa laptop markets in Autarky.
Botswana and South Africa both produce laptops. Botswana produces the Lenovo brand whereas South Africa produces the Acer brand. The demand and supply structure in both countries are given by the Dixit-Stiglitz model, with an elasticity of substitution equal to two in both countries. Assume that the laptop market in Botswana is much large than in South Africa. In both countries, the marginal labour input requirement is one and the fixed labour input per variety is 2.5. Botswana's labour employment in the cell phone industry is 20 million people whereas that of South Africa is 10 million people. Determine the number of varieties that will be supplied to Botswana and South Africa laptop markets in Autarky.
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