Now, each shop has an opportunity to exit. First, each shop exits for exogenous
reasons with probability. Second, each remaining shop can choose voluntarily to exit if
the shop owner is "hopeless," that is, if his financial wealth A is not enough to pay for
the coming week's fixed overhead cost. Third, each unprofitable shop exits with probability
In computing profitability, the shop owner takes into account the opportunity cost of his
labor services, that could be earning a wage, and the interest-opportunity cost of maintaining
the shop's inventory. Once a shop exits for any reason, all trading relationships (with both
employees and customers) are dissolved.