Here, pi1 denotes the fraction of agents ofType i = 2, 3 holding Good 1; is the constant discount factor. The right
hand side of this inequality represents the discounted, expected difference in utility from having Good 3, rather than
Good 2 in storage. The left hand side, denotes the additional storage cost of Good 3 over Good 2. If this storage cost
difference outweighs the expected gain in utility, then it is optimal for Type 1 players to play fundamentally and refuse to trade Good 2 for Good 3.