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Baye Morgan Scholten (2006) - Information Search and Price Dispersion (view source)
Revision as of 15:56, 11 April 2010
, 15:56, 11 April 2010→Information Clearinghouses
This is obtained by equating the inside and outside options and solving for ><math>\alpha\,</math>.
The outside option is: <center><math>(v-m)\left(L-\frac{S}{n}(1-\alpha)^{n-1}\right)\,</math>, where <math>(v-m)\,</mathcenter> is the mark-up, <math>\frac{S}{n}\,</math> is the traffic if no-one else lists and <math>(1-\alpha)^{n-1}\,</math> is the probability that no-one else lists.
where <math>(v-m)\,</math> is the mark-up, <math>\frac{S}{n}\,</math> is the traffic if no-one else lists and <math>(1-\alpha)^{n-1}\,</math> is the probability that no-one else lists.
The inside option is: <center><math>(v-m)\left(L - S(1-\alpha)^{n-1}\right)-\phi\,</math></center>, where <math>S\,</math> is the traffic obtained from listing and <math>\phi\,</math> is the cost of listing.
