Working Paper Series
Imperfect Information Equilibrium, Existence, Configuration and Stability
Abstract: In this paper we examine the stability properties of price
dispersion equi1ibrium in a market where individuals and firms have to make
efforts to collect information about the prices charged by firms and demand
resulting from consumer behavior. The households are searching according to
sequential stopping rules and the firms are making experiments in order to
find out their demand curve. We show that the price dispersion equilibrium
in such a market is stable.
Keywords: Consumer and firm behavior; Imperfect information; Price equilibrium; (follow links to similar papers)
JEL-Codes: C70; D11; D21; (follow links to similar papers)
36 pages, December 1980, Revised February 1982
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