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Refunds and Collusion

Author

Listed:
  • Oz Shy

    (WZB - Social Science Research Center Berlin)

  • Staffan Ringbom

    (Department of Economics, Swedish School of Economics)

Abstract

We characterize the conditions under which industry-wide agreements on refund policies weaken price competition. We identify the conditions under which joint industry proffit increases with the amount of refunds promised to those consumers who cancel a reservation or return a product. We compare it to similar industry configurations when firms set up shipping and handling charges instead of refunds. Finally, we investigate refund policies under moral hazard.

Suggested Citation

  • Oz Shy & Staffan Ringbom, 2005. "Refunds and Collusion," "Marco Fanno" Working Papers 0001, Dipartimento di Scienze Economiche "Marco Fanno".
    • Handle: RePEc:pad:wpaper:0001
    as

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    File URL: https://economia.unipd.it/sites/economia.unipd.it/files/20050001.pdf
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    References listed on IDEAS

    as
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    8. Gale, I., 1992. "Price Dispersion in a Market with Advance Purchases," Working papers 9214, Wisconsin Madison - Social Systems.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Refunds; Partial refunds; Collusion on refunds; Shipping & handling charges; Moral hazard;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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