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MATCHING OWN PRICES, RIVALS' PRICES OR BOTH?

Morten Hviid and Greg Shaffer

Journal of Industrial Economics, 2010, vol. 58, issue 3, 479-506

Abstract: Many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices. That is, many retailers combine elements of both price‐matching guarantees and retroactive most‐favored‐customer clauses. This is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices, and thus one might think the two practices are substitutes. In this paper, we show that price‐matching guarantees and most‐favored‐customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself.

Date: 2010
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Citations: View citations in EconPapers (11)

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https://doi.org/10.1111/j.1467-6451.2010.00423.x

Related works:
Working Paper: Matching Own Prices, Rivals' Prices, or Both (2008) Downloads
Working Paper: Matching Own Prices, Rivals' Prices, or Both (2008) Downloads
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Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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