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Experimental Duopolies Under Price Guarantees

Author

Listed:
  • Gerardo Sabater

    (Economics - University Jaume I)

  • Nikolaos Georgantzis

    (Economics - UGR - Universidad de Granada = University of Granada)

  • Enrique Fatas

    (LINEEX - EUniversity of valencia)

  • Mañez Castillejo Juan

    (Economia Aplicada II - UV - Universitat de València)

Abstract

In a symmetric differentiated experimental duopoly we test the ability of Price Guarantees (PGs) to raise prices above the competitive levels. Different types of PGs ("aggressive" and "soft" price-beating and price-matching) are implemented either as an exogenously imposed market rule or as a business strategy. Our results show that PGs may lead close to the collusive outcome, depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the "aggressive" price-beating type.

Suggested Citation

  • Gerardo Sabater & Nikolaos Georgantzis & Enrique Fatas & Mañez Castillejo Juan, 2011. "Experimental Duopolies Under Price Guarantees," Post-Print hal-00732113, HAL.
    • Handle: RePEc:hal:journl:hal-00732113
    DOI: 10.1080/00036846.2011.568398
    Note: View the original document on HAL open archive server: https://hal.science/hal-00732113
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    Cited by:

    1. Andreas Pollak, 2017. "Do Price-Matching Guarantees with Markups Facilitate Tacit Collusion? Theory and Experiment," Working Paper Series in Economics 93, University of Cologne, Department of Economics.
    2. Pio Baake & Ulrich Schwalbe, 2013. "Price Guarantees, Consumer Search, and Hassle Costs," Discussion Papers of DIW Berlin 1335, DIW Berlin, German Institute for Economic Research.
    3. Mongoljin Batsaikhan & Norovsambuu Tumennasan, 2018. "Output Decisions and Price Matching: Theory and Experiment," Management Science, INFORMS, vol. 64(8), pages 3609-3624, August.
    4. Iván Barreda-Tarrazona & Nikolaos Georgantzís & Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2012. "Managerial compensation contracts in quantity-setting duopoly," Working Papers 2012/17, Economics Department, Universitat Jaume I, Castellón (Spain).
    5. Dewenter Ralf & Schwalbe Ulrich, 2016. "Preisgarantien im Kraftstoffmarkt," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(3), pages 276-288, September.
    6. Fatas, Enrique & Morales, Antonio J. & Sonntag, Axel, 2020. "Empowering consumers to reduce corporate tax avoidance: Theory and Experiments," IHS Working Paper Series 21, Institute for Advanced Studies.
    7. Barreda-Tarrazona, Iván & Georgantzís, Nikolaos & Manasakis, Constantine & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2016. "Endogenous managerial compensation contracts in experimental quantity-setting duopolies," Economic Modelling, Elsevier, vol. 54(C), pages 205-217.
    8. Antonio J. Morales & Enrique Fatas, 2021. "Price competition and nominal illusion: experimental evidence and a behavioural model," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(4), pages 607-632, December.

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