Price Discrimination through Offers to Match Price

Ivan Png and David Hirshleifer

The Journal of Business, 1987, vol. 60, issue 3, 365-83

Abstract: In this paper, a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop. If the list price elsewhere is lower, the firm will be successful in discrimination. The list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers. Furthermore, if sellers coordinate, they discriminate more efficaciously and increase their profits by increa sing their total sales. Copyright 1987 by the University of Chicago.

Date: 1987
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