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Baye Morgan Scholten (2006) - Information Search and Price Dispersion (view source)
Revision as of 17:01, 26 January 2010
, 17:01, 26 January 2010→Reinganum (1979) Revisited
<center><math>h(r) = \int_{\underline{p}}^r (v(p) -v(r)d\hat{F}(p)-c=0\,</math></center>
However, a firm's demand is zero above <math>r\,</math>, so firms will have no sales in the interval <math>\left (r,\frac{\overline{m}\epsilon}{1+\epsilon} \right ]\,</math>, and will set their price at <math>r\,</math> (as the elasticity of demand is constant).
Therefore:
