Pro-competitive Price Beating Guarantees: Experimental Evidence

Enrique Fatas (), Nikolaos Georgantzís (), Juan A. Mañez and Gerardo Sabater-Grande

Review of Industrial Organization, 2005, vol. 26, issue 1, 115-136

Abstract: We report experimental results on duopoly pricing with and without price beating guarantees (PBG). In two control treatments, price beating is either imposed as an industry-wide rule or offered as a business strategy. Our major finding is that when price beating guarantees are imposed as a rule or offered as an option, effective prices are equal to or lower than those in a baseline treatment in which price beating is forbidden. Also, when price beating is treated as a business strategy, less than 50% of subjects adopted the guarantee, suggesting that, subjects realize the pro-competitive effects of the guarantee. Copyright Springer 2005

Keywords: experimental oligopolies; price beating guarantees (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11151-004-6614-2

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