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Pro-competitive Price Beating Guarantees: Experimental Evidence

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Author Info

  • Enrique Fatás
  • Nikolaos Georgantzís

    ()

  • Juan Máñez
  • Gerardo Sabater-Grande

Abstract

We report experimental results on duopoly pricing with and without price beating guarantees (PBG). In two control treatments, price beating is either imposed as an industry-wide rule or offered as a business strategy. Our major finding is that when price beating guarantees are imposed as a rule or offered as an option, effective prices are equal to or lower than those in a baseline treatment in which price beating is forbidden. Also, when price beating is treated as a business strategy, less than 50% of subjects adopted the guarantee, suggesting that, subjects realize the pro-competitive effects of the guarantee. Copyright Springer 2005

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File URL: http://hdl.handle.net/10.1007/s11151-004-6614-2
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 26 (2005)
Issue (Month): 1 (November)
Pages: 115-136

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Handle: RePEc:kap:revind:v:26:y:2005:i:1:p:115-136

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: experimental oligopolies; price beating guarantees;

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Cited by:
  1. Datta, Shakun & Offenberg, Jennifer, 2003. "An Experimental Examination of Competitor-Based Price Matching Guarantees," MPRA Paper 575, University Library of Munich, Germany, revised 22 Oct 2006.
  2. Enrique Fatas & Juan Mañez, 2007. "Are low-price promises collusion guarantees? An experimental test of price matching policies," Spanish Economic Review, Springer, Springer, vol. 9(1), pages 59-77, March.

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