A COMMENT ON "PRICE DISPERSION, INFLATION, AND WELFARE" BY A. HEAD AND A. KUMAR

The principal results of Head and Kumar's article are derived under the natural assumption that the number of price offers received per period by buyers is distributed Poisson. This case is of interest for two reasons. First, because the infinite sums and integrals that enter the equilibrium conditions can be solved in closed form, the derivations of the model's implications are straightforward. Second, by regarding the arrival rate as the relevant measure of search intensity, the analysis of endogenous search effort is simplified. Copyright 2005 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.