EconPapers    
Economics at your fingertips  
 

An experimental examination of competitor-based price matching guarantees

Shakun Mago () and Jennifer G. Pate

Journal of Economic Behavior & Organization, 2009, vol. 70, issue 1-2, 342-360

Abstract: We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggests that the mere presence of cost asymmetries may curtail collusive behavior.

Keywords: Price; matching; Price; guarantees; Laboratory; Collusion (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-2681(09)00050-X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: An Experimental Examination of Competitor-Based Price Matching Guarantees (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:70:y:2009:i:1-2:p:342-360

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-06-09
Handle: RePEc:eee:jeborg:v:70:y:2009:i:1-2:p:342-360