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Baye Morgan Scholten (2006) - Information Search and Price Dispersion (view source)
Revision as of 14:22, 26 January 2010
, 14:22, 26 January 2010→The MacMinn (1980) Model
*Firms have privately observed marginal costs drawn from <math>G(m)\,</math> on <math>[\underline{m},\overline{m}]\,</math>, where <math>\overline{m} < v\,</math>.
The MacMinn model can be solved using the [http://en.wikipedia.org/wiki/Revenue_equivalence_theorem#Revenue_equivalence Revenue Equivalence Theorem]. Each <math>n^*\,</math> firms competes with <math>n^*-1\,</math> firms. The firm offering the lowest price 'wins' the 'auction'.
The revenue to any auction where firms have a marginal cost <math>m\,</math>, the lowests price firm cost wins and the the firms with highest marginal cost earns zero surplus is:
