Datta, Shakun and Offenberg, Jennifer (2003): An Experimental Examination of Competitor-Based Price Matching Guarantees.
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We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggest that the mere presence of cost asymmetries may curtail collusive behavior.
|Item Type:||MPRA Paper|
|Original Title:||An Experimental Examination of Competitor-Based Price Matching Guarantees|
|Keywords:||Price Matching; Price Guarantees; Laboratory; Collusion|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D43 - Oligopoly and Other Forms of Market Imperfection
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
L - Industrial Organization > L4 - Antitrust Issues and Policies
|Depositing User:||Jennifer Offenberg|
|Date Deposited:||25. Oct 2006|
|Last Modified:||17. Feb 2013 18:42|
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