BioChem has a patent on a chemical product that is used as a key input in producing farm and home agricultural fertilizer. Currently, BioChem produces the product and sells it to companies who manufacture the final products for the farm and home users. BioChem faces the following demand curves from the farm and home market segments: Farm: P = 501 - 10Q Home: P = 101 - 5Q BioChem faces a marginal cost of production of $1. Assuming there is a potential arbitrage opportunity on resale of the chemical product, what would be the best way for BioChem to price discriminate? BioChem should only sell to companies in the farm market. BioChem should forward integrate into the farm market segment. BioChem should only sell to companies in the home market. BioChem should forward integrate into the home market segment.
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