Refunds and Collusion
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.
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- repec:ebl:ecbull:v:13:y:2004:i:1:p:1-7 is not listed on IDEAS
- Gale, I., 1992. "Price Dispersion in a Market with Advance Purchases," Working papers 9214, Wisconsin Madison - Social Systems. Full references (including those not matched with items on IDEAS)
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