Consumers’ possible strategies

Under beliefs (p = 1; q = 0)

Under beliefs (p = 0; q = 1)

1) “Always inspect”

$c_i<\min \left(d\left(1-x\right),e\left(1-y\right)\right)$

$c_i<\min \left(dy,ex\right)$

2) “Inspect negative, not inspect positive”

$e\left(1-y\right)<c_i<d\left(1-x\right)$

$dy<c_i<ex$

3) “Not inspect negative, inspect positive”

$d\left(1-x\right)<c_i<e\left(1-y\right)$

$ex<c_i<dy$

4) “Always not inspect”

$c_i>\max \left(d\left(1-x\right),e\left(1-y\right)\right)$

$c_i<\max \left(dy,ex\right)$