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<math>
f(x) =
\begin{cases}
1 & -1 \le x < 0 \\
\frac{1}{2} & x = 0 \\
1 - x^2 & \mbox{otherwise}
\end{cases}
</math>
1 & \mbox{if} \; p_j \le r \\0 & \mbox{if}\; p_j > r \end{cases}</math></center> <center><math>\mathbb{E} \pi_j = \begin{cases}(p_j-m_j)q(p_j)\left ( \frac{\mu}{1-\lambda} \right ) & \mbox{if}\; p_j \le r \\
Baye Morgan Scholten (2006) - Information Search and Price Dispersion (view source)
Revision as of 04:29, 26 January 2010
, 04:29, 26 January 2010→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>\lambda\,</math> (<math>\lambda \in \left [0,1 \right )\,</math>) of firms price above <math>r</math>. Then:
<center><math>
\mathbb{E} \pi_j =
\begin{cases}
0 & \mbox{if}\; p_j > r
\end{cases}
