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Unbeatable Value Low-Price Guarantee: Collusive Mechanism or Advertising Strategy?


  • Juan A. Mañez


"This paper investigates the effects of a low-price guarantee (price-beating guarantee) on the patterns of price setting of three supermarkets using micro-level price data. Following recent theoretical developments, the paper analyzes the ability of low-price guarantees to sustain anticompetitive prices. My empirical analysis suggests instead that this low-price guarantee may serve as an advertising device to signal low prices. The supermarket offering the low-price guarantee, aware of its price advantage in a subset of products, uses it to signal low prices to induce consumers to switch supermarkets." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

Suggested Citation

  • Juan A. Mañez, 2006. "Unbeatable Value Low-Price Guarantee: Collusive Mechanism or Advertising Strategy?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(1), pages 143-166, March.
  • Handle: RePEc:bla:jemstr:v:15:y:2006:i:1:p:143-166

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    References listed on IDEAS

    1. David Romer, 2002. "It's Fourth Down and What Does the Bellman Equation Say? A Dynamic Programming Analysis of Football Strategy," NBER Working Papers 9024, National Bureau of Economic Research, Inc.
    2. Justin Wolfers, 2006. "Point Shaving: Corruption in NCAA Basketball," American Economic Review, American Economic Association, vol. 96(2), pages 279-283, May.
    3. Zitzewitz, Eric, 2001. "Measuring Herding and Exaggeration by Equity Analysts and Other Opinion Sellers," Research Papers 1802, Stanford University, Graduate School of Business.
    4. Prendergast, Canice, 1993. "A Theory of "Yes Men."," American Economic Review, American Economic Association, vol. 83(4), pages 757-770, September.
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    Cited by:

    1. Koh, Dong-Hee & Moon, Junyean & Schellhase, Ralf, 2012. "Price-matching guarantees: Influences on pricing strategy in a market with asymmetric firms," Journal of Business Research, Elsevier, vol. 65(11), pages 1551-1557.
    2. Enrique Fatás & Nikolaos Georgantzís & Juan A. Máñez & Gerardo Sabater, 2013. "Experimental duopolies under price guarantees," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 15-35, January.

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