EconPapers    
Economics at your fingertips  
 

Price-Match Announcements in a Consumer Search Duopoly

Aleksandr Yankelevich and Brady Vaughan ()
Additional contact information
Brady Vaughan: Department of Economics, Washington University in St. Louis, Campus Box 1208, St. Louis, MO 63130, USA

Southern Economic Journal, 2016, vol. 82, issue 4, 1186-1211

Abstract: Using a model of sequential search, we show that announcements to price-match raise prices by altering consumer search behavior. First, price-matching diminishes firms’ incentives to lower prices to attract consumers who have no search costs. Second, for consumers with positive search costs, price-matching lowers the marginal benefit of search, inducing them to accept higher prices. Finally, price-matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium. Price increases grow in the proportion of consumers who invoke price-matching guarantees and in the level of equilibrium asymmetry.

JEL-codes: D43 D83 L13 M31 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1002/soej.12118

Related works:
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:sej:ancoec:v:82:4:y:2016:p:1186-1211

Access Statistics for this article

Southern Economic Journal is currently edited by Laura Razzolini

More articles in Southern Economic Journal from Southern Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Laura Razzolini (). This e-mail address is bad, please contact .

 
Page updated 2020-08-24
Handle: RePEc:sej:ancoec:v:82:4:y:2016:p:1186-1211