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Price Discrimination through Offers to Match Price

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Author Info
Png, I P L
Hirshleifer, D

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Abstract

In this paper, a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop. If the list price elsewhere is lower, the firm will be successful in discrimination. The list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers. Furthermore, if sellers coordinate, they discriminate more efficaciously and increase their profits by increa sing their total sales. Copyright 1987 by the University of Chicago.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 60 (1987)
Issue (Month): 3 (July)
Pages: 365-83
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Handle: RePEc:ucp:jnlbus:v:60:y:1987:i:3:p:365-83

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  1. Michael Baye & Shyh-Fang Ueng, 1999. "Commitment and price competition in a dynamic differentiated-product duopoly," Journal of Economics, Springer, vol. 69(1), pages 41-52, February. [Downloadable!] (restricted)
  2. Maria Arbatskaya & Morten Hviid & Greg Shaffer, 1999. "On the incidence and Variety of Low-Price Guarantees," CIE Discussion Papers 1999-10, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  3. 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. [Downloadable!]
  4. Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2008. "Contests with Rank-Order Spillovers," Working Papers 2008-20, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
    Other versions:
  5. Subhasish Dugar & Todd Sorensen, 2006. "Hassle Costs, Price-Matching Guarantees and Price Competition: An Experiment," Review of Industrial Organization, Springer, vol. 28(4), pages 359-378, June. [Downloadable!] (restricted)
  6. Il-Horn Hann & Kai-Lung Hui & Sang-Yong Tom Lee & Ivan P.L. Png, 2005. "Sales and Promotions: A More General Model," Industrial Organization 0508014, EconWPA. [Downloadable!]
  7. Fiona Scott Morton, 1996. "The Strategic Response by Pharmaceutical Firms to the Medicaid Most-Favored-Customer Rules," NBER Working Papers 5717, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Bing Jing, 2007. "Product differentiation under imperfect information: When does offering a lower quality pay?," Quantitative Marketing and Economics, Springer, vol. 5(1), pages 35-61, March. [Downloadable!] (restricted)
  9. Enrique Fatas & Juan Mañez, 2007. "Are low-price promises collusion guarantees? An experimental test of price matching policies," Spanish Economic Review, Springer, vol. 9(1), pages 59-77, March. [Downloadable!] (restricted)
  10. F. Javier Casado-Izaga, 2000. "Welfare effects of price-matching policies in a differentiated product market," Investigaciones Economicas, Fundación SEPI, vol. 24(2), pages 487-498, May. [Downloadable!]
  11. Martin Gaynor & William B. Vogt, 1999. "Antitrust and Competition in Health Care Markets," NBER Working Papers 7112, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Subhasish Dugar, 2007. "Price-Matching Guarantees and Equilibrium Selection in a Homogenous Product Market: An Experimental Study," Review of Industrial Organization, Springer, vol. 30(2), pages 107-119, March. [Downloadable!] (restricted)
  13. Wen Zhou, 2006. "A Simple Model of Entry That Increases Price Levels and Price Dispersion," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 6(1), pages 1647-1647. [Downloadable!] (restricted)
  14. Morten Hviid & Greg Shaffer, 2008. "Matching Own Prices, Rivals' Prices, or Both," Working Papers 08-26, Centre for Competition Policy, University of East Anglia. [Downloadable!]
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