Price Leadership with Incomplete Information
Journal of Economic Behavior and Organization
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.
Price Leadership with Incomplete Information” (with Richard S. Higgins and Robert D. Tollison), Journal of Economic Behavior and Organization 11 (1989), pp. 423–429.