We derive a general maximum entropy based method to infer the underdetermined joint distribution in this class of models, which we refer to as Quantal Response Statistical Equilibrium (QRSE) models. We apply this method to the classical Smithian theory of competition where firms’ profit rates are observed but the entry and exit decisions that determine the distribution of profit rates is unobserved.
Authors: Ellis Scharfenaker, Duncan Foley
Download PDF
