Price Leadership with Incomplete Information

Document Type

Article

Journal/Book Title/Conference

Journal of Economic Behavior and Organization

Volume

11

Publication Date

1989

First Page

423

Last Page

429

Abstract

The dominant firm is a price searcher for the market. As such, it is in the position of providing a public good for fringe suppliers. This public good consists in the price setter's search for the best price. This paper presents a model of the dominant firm's behavior in acquiring information about demand where such information is costly. The results accord with intuition. For example, the larger the market share of the dominant firm, the more information it acquires.

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