Agecon 636 Part II

Syllabus

Readings

• Varian, H. "A Model of Sale," American Economic Review, 1980, 70(4), 651-659.

• Wilde, L. and Schwartz, A. "Equilibrium Comparison Shopping," Review of Economic Studies, 1979, 46 (3), 543-553.

• Wilde, L. "Labor Market Equilibrium under Nonsequential Search," Journal of Economic Theory, 1977, 16, 373-393.

• De Los Santos., B, Hortacsu, A. and Wildenbeest, M. "Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior," American Economic Review, 2012, 102, 2955-2980.

• Babur De Los Santos, Ali Hortaçsu & Matthijs R. Wildenbeest, "Search With Learning for Differentiated Products:  Evidence from E-Commerce," Journal of Business and Economic Statistics, 2017, 35:4, 626-641.  A brief note on Dirichlet Process

Assignment

• Assignment One: Derive the equilibrium price distribution using the model of Varian (1980) under the same set of conditions except the alternative cost function c(q)=k+b*q, where k is a positive fixed cost, b is a positive marginal cost, and q is quantity. Due on Oct. 30. 

• Assignment Two: Take the model of Wilde and Schwartz (1979) and consider the equilibrium profit and number of firms fixed. Derive the condition, in terms of the `search intensity' n (i.e., the number of firms sampled by shoppers), under which the equilibrium always entails a mass point. Try to provide an economic explanation of your derived condition. Due on Nov. 20.

Final Exam: 2:10-3:50pm, Dec. 4th