Refunds and Collusion

Oz Shy and Staffan Ringbom ()
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Staffan Ringbom: Department of Economics, Swedish School of Economics

No 1, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: We characterize the conditions under which industry-wide agreements on refund policies weaken price competition. We identify the conditions under which joint industry proffit increases with the amount of refunds promised to those consumers who cancel a reservation or return a product. We compare it to similar industry configurations when firms set up shipping and handling charges instead of refunds. Finally, we investigate refund policies under moral hazard.

Keywords: Refunds; Partial refunds; Collusion on refunds; Shipping & handling charges; Moral hazard (search for similar items in EconPapers)
JEL-codes: L1 L41 M2 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005-05
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0001

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