Price Guarantees, Consumer Search, and Hassle Costs
The paper deals with the competitive effects of price guarantees in a spatial duopoly where consumers can search for lower prices but have to incur hassle costs if they want to claim a price guarantee. It is shown that symmetric equilibria with and without price guarantees exist but price guarantees will have no effect on prices if search costs are low, hassle costs are high and the number of uninformed consumers is small. However, when both firms use price guarantees, there also exist payoff-dominant equilibria where both firms use mixed pricing strategies in the form of "high-low" pricing schemes, provided that the search costs are sufficiently high.
|Date of creation:||2013|
|Contact details of provider:|| Web page: http://www.socialpolitik.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edlin, Aaron S & Emch, Eric R, 1999.
"The Welfare Losses from Price-Matching Policies,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 47(2), pages 145-167, June.
- Aaron S. Edlin and Eric R. Emch., 1997. "The Welfare Losses from Price Matching Policies," Economics Working Papers 97-257, University of California at Berkeley.
- Aaron S. Edlin & Eric R. Emch, 1998. "The Welfare Losses from Price Matching Policies," Law and Economics 9803001, EconWPA, revised 26 May 1998.
- Corts, Kenneth S., 1995. "On the robustness of the argument that price-matching is anti-competitive," Economics Letters, Elsevier, vol. 47(3-4), pages 417-421, March.
- Morten Hviid & Greg Shaffer, 1999. "Hassle Costs: The Achilles' Heel of Price-Matching Guarantees," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(4), pages 489-521, December.
- Belton, Terrence M., 1987. "A model of duopoly and meeting or beating competition," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 399-417.
- Baye, M.R. & Kovenock, D., 1990.
"How To Sell A Pickup Truck: "Beat-Or-Pay" Advertisements As Facilitating Devices,"
9053, Tilburg - Center for Economic Research.
- Baye, Michael R. & Kovenock, Dan, 1994. "How to sell a pickup truck : 'Beat-or-pay' advertisements as facilitating devices," International Journal of Industrial Organization, Elsevier, vol. 12(1), pages 21-33, March.
- Baye, M.R. & Kovenock, D., 1992. "How to Sell a Pickup Truck: "Beat-or-Pay" Adverrtisements as Facilitating Devices," Papers 9-92-3, Pennsylvania State - Department of Economics.
- Baye, M.R. & Kovenock, D., 1992. "How to Sell a Pickup Truck; "Beat-or-Pay" Advertisements as Facilitating Devices"," Purdue University Economics Working Papers 1032, Purdue University, Department of Economics.
- Baye, M.R. & Kovenock, D., 1990. "How To Sell a Pickup Truck : "Beat-or-Pay" Advertisements as Facilitating Devices," Discussion Paper 1990-53, Tilburg University, Center for Economic Research.
- Mago, Shakun Datta & Pate, Jennifer G., 2009.
"An experimental examination of competitor-based price matching guarantees,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 70(1-2), pages 342-360, May.
- 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.
- Logan, John W. & Lutter, Randall W., 1989. "Guaranteed lowest prices: do they facilitate collusion?," Economics Letters, Elsevier, vol. 31(2), pages 189-192, December.
- Arbatskaya, Maria & Hviid, Morten & Shaffer, Greg, 2006. "On the use of low-price guarantees to discourage price cutting," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1139-1156, November.
- Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 1-26.
- Edlin, Aaron S. & Emch, Eric R., 1999. "The Welfare Losses from Price-Matching Policies," Berkeley Olin Program in Law & Economics, Working Paper Series qt43b7w47c, Berkeley Olin Program in Law & Economics.
- Maarten Janssen & Alexei Parakhonyak, 2009. "Minimum Price Guarantees In a Consumer Search Model," Tinbergen Institute Discussion Papers 09-089/1, Tinbergen Institute.
- Kaplan, Todd R., 2000. "Effective price-matching: a comment," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1291-1294, December.
- Morten Hviid & Greg Shaffer, 2012. "Optimal low-price guarantees with anchoring," Quantitative Marketing and Economics (QME), Springer, vol. 10(4), pages 393-417, December.
- Gerardo Sabater & Nikolaos Georgantzis & Enrique Fatas & Mañez Castillejo Juan, 2011.
"Experimental Duopolies Under Price Guarantees,"
- 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.
- Arbatskaya, Maria & Hviid, Morten & Shaffer, Greg, 2004. "On the Incidence and Variety of Low-Price Guarantees," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 307-32, April.
- Subhasish Dugar, 2007. "Price-Matching Guarantees and Equilibrium Selection in a Homogenous Product Market: An Experimental Study," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(2), pages 107-119, March.
- Lu, Yuanzhu & Wright, Julian, 2010. "Tacit collusion with price-matching punishments," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 298-306, May.
- Morten Hviid & Greg Shaffer, 2008. "Matching Own Prices, Rivals' Prices, or Both," Working Papers 08-26, Centre for Competition Policy, University of East Anglia.
- Arbatskaya, Maria, 2001. "Can low-price guarantees deter entry?," International Journal of Industrial Organization, Elsevier, vol. 19(9), pages 1387-1406, November.
- Wen Mao, 2005. "Price-matching policy with imperfect information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 367-372.
When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc13:80023. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.