Learning in a Perfectly Competitive Market
Egas Salgueiro () and
Cahiers de recherche from CIRPEE
We study learning in perfect competition. A price-taking firm sells a good whose quality is unknown to some buyers. The uninformed buyers use the price to infer information about quality. The presence of noise on the supply prevents perfect learning. Even though the firm is a price-taker, information is disseminated though the price. The shape of the supply curve influences the amount of information contained in the price, which, in turn, affects the competitive equilibrium through the learning process of the uninformed buyers.
Keywords: Asymmetric information; Learning; Perfect competition; Rational expectations (search for similar items in EconPapers)
JEL-codes: D2 D41 D8 L1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:1423
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