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Baye Morgan Scholten (2006) - Information Search and Price Dispersion (view source)
Revision as of 04:25, 26 January 2010
, 04:25, 26 January 2010→Reinganum (1979) Revisited
===Reinganum (1979) Revisited===
Recall that Reinganum (1979) has firms with marginal costs drawn from a distribution <math>G(m)\,</math>. Suppose that an individual firm's cost is <math>m_j\,</math>, and that a fraction <math>\lamdalambda\,</math> (<math>\lamda lambda \in \left [0,1 \right )\,</math>) of firms price above <math>r. Then:
<center><math>
\mathbb{E}\pi_j =
\begin{cases}
(p_j-m_j)q(p_j)\left ( \frac{\mu}{1-lamdalambda} \right ) & mbox{if}\; p_j \le r \\
0 & mbox{if}\; p_j > r
/end{cases}
