Engel, Eduardo; Fischer, Ronald - 2008
equalities are trivial. The first inequality follows from Jensen’s inequality
(Assumption 1 implies that Π−1e is convex) while … the second inequality is justified by the firm’s
participation constraint. Finally, the last equality follows from the … therefore
is optimal.
Finally note that the first inequality is strict unless the function Πe(x) is linear in the range
of …