Price-Matching leads to the Cournot Outcome

Norovsambuu Tumennasan () and Mongoljin Batsaikhan ()

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: We study the effects of price-matching in a duopoly setting in which each firm selects both its price and output, simultaneously. We show that the availability of a pricematching option leads to the Cournot outcome in this setting. This result is a stark contrast to the one obtained in the standard Bertrand competition that the market price in the presence of a price-matching option ranges from the monopolistic price to the Bertrand price. Our result suggests that the effect of price-matching depends on whether the output is a choice variable for the firms.

Keywords: Price; matching (search for similar items in EconPapers)
JEL-codes: D4 L00 (search for similar items in EconPapers)
Pages: 10
Date: 2013-06-18
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2013-12

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