A Generalized Model of Pricing for Homogeneous Goods under Imperfect Information
Review of Economic Studies
1982
This paper generalizes the model developed in Wilde and Schwartz (1979) to allow downward sloping demand curves and u-shaped average cost curves. It shows that the basic qualitative conclusions of Wilde and Schwartz still hold. Moreover, it shows that the critical proportion of comparison shoppers needed to generate a competitive equilibrium falls as demand becomes more elastic or average costs become more inelastic. Finally, it shows that when imperfect information generates non-competitive outcomes, they are bounded below, in welfare terms, by the monopolistically competitive equilibrium.
- DOI
- 10.2307/2297272
- Volume
- 49 (2)
- Pages
- 229
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- BibTeX
- Sources
- openalex crossref