Armstrong, Mark (contributor); Chen, Yongmin (contributor) - 2007
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Whenconsumersarehomogeneousintermsoftheirinformation, i.e., λ = 0 or λ = 1,
the unique equilibrium involves marginal-cost pricing and zero profits. When λ = 1, in … “add-on” pricing, where the sophisticated consumers can be cross-subsidised
by the high prices the naive consumers end up … pricing
strategy.
A symmetric mixed pricing strategy will involve each firm’s price being taken from
the cdf F(p), where F …