In this section we present our model and analyze consumer and producer behavior when there is no value from learning. This allows us to present an hierarchy of complex price schedules and to separate their differing abilities to produce profits from the costs and benefits of learning. In Section 3 we introduce an opportunity to learn, and then study the interaction between learning and pricing choices.
Consumers have identical a priori subjective distributions of beliefs over article values.
The marginal cost of duplicating and delivering any item is zero.