- #1

lugita15

- 1,554

- 15

Microeconomic theory says that you should sell the water for a price even if you're not interested in making money; if you really don't care about the money you should just donate the sales proceeds to charity, but the imposition of a price increases social welfare. My question is, how is the right price determined? I know in the case where you have self-interested buyers and sellers, then the optimum price is the intersection of the supply and demand curves, i.e. the market clearing price. But how would you do it in this case, where the buyers are all self-interested, but the seller doesn't care about himself at all and just wants to help society?

The problem is, given a bunch of buyers, each with their own demand curve for water (let's assume for simplicity that they're all linear, but have different slopes), what is the right price to charge them, given a fixed supply of water bottles?

Any help would be greatly appreciated.

Thank You in Advance.