Are low-price promises collusion guarantees? An experimental test of price matching policies

• Autores: Enrique Fatás Juberías, Juan Antonio Máñez Castillejo
• Localización: Spanish economic review, ISSN 1435-5469, Vol. 9, Nº 1, 2007, págs. 59-77
• Idioma: inglés
• DOI: 10.1007/s10108-006-9012-0
• Texto completo no disponible (Saber más ...)
• Dialnet Métricas: 1 Cita
• Resumen

  • In a symmetric differentiated experimental duopoly we test the ability of Price Matching Guarantees (PMG) to raise prices above the competitive levels. PMG are introduced both as a market rule (the selling price is always the lowest posted price) and as a business strategy (subjects decide whether or not to offer them). Our results show that PMG lead to a clear collusive outcome as markets quickly and fully converge to the collusive prediction if PMG are imposed as a market rule. Whenever subjects are allowed to decide whether to adopt PMG or not we observe that almost all subjects decide to adopt them and prices get very close to the collusive ones.

• Referencias bibliográficas
  • Arbatskaya M, Hviid M, Shaffer G (1999) Promises to match or beat rival prices. In: Baye M (ed) Advances in applied microeconomics, vol 8....
  • Arbatskaya M, Hviid M, Shaffer G (2004) On the incidence and variety of low price guarantees. J Law Econ XLVII:307-332
  • Baye MR, Kovenock D (1994) How to sell a pickup truck: 'Beat-or-Pay' advertisements as facilitating devices. Int J Ind Organ 12:21-33
  • Belton M (1987) A model of doupoly and meeting or beating the competition. Int J Ind Organ 5:399-417
  • Benson B, Faminow ML (1988) The impact of experience on prices and profits in experimental dupoly markets. J Econ Behav Organ 9:345-365
  • Broseta B, Fatas E, Neugebauer T (2003) Asset markets and equilibrium selection in public goods games with provision points: an experimental...
  • Capra M, Goeree JK, Gómez R, Holt CA (2002) Learning and noisy equilibrium behaviour in an experimental study of imperfect price competition....
  • Corts KS (1995) On the robustness of the argument that price matching is anti-competitive. Econ Lett 47:417-421
  • Corts KS (1996) On the competitive effects of price matching policies. Int J Ind Organ 15:283-299
  • Croson R, Fatas E, Neugebauer T (2005) Reciprocity, matching and conditional cooperation in two public goods games. Econ Lett 87:95-101
  • Davis DD, Holt CA (1993) Experimental economics. Princeton University Press, Princeton
  • Deck CA, Wilson B (2003) Automated pricing rules in electronic posted offer markets. Econ Inq 41(2):208-223
  • Dixit A, Nalebuff B (1991) Thinking strategically. W.W. Norten & Company, Inc., New York
  • Doyle C (1988) Different selling strategies in Bertrand oligopoly. Econ Lett 28:387-390
  • Dufwenberg M, Gneezy U (2000) Price competition and market concentration: an experimental study. Int J Ind Organ 18:7-22
  • Edlin A (1997) Do guaranteed-low price policies guarantee high prices, and can antitrust rise to the challenge? Harv Law Rev 111:528-575
  • Edlin A, Emch E (1999) The welfare losses from price-matching policies. J Ind Econ 47(2):145-167
  • Fatas E, Georgantzís N, Mañez J, Sabater G (2005) Pro-competitive price beating guarantees. Experimental evidence. Rev Ind Organ 26:115-136
  • Fatas E, Neugebauer T, Perote J (2006) Within team competition in the minimum game. Pac Econ Rev 11(2):247-270
  • Fischbacher U (1999) z-Tree: Zurich toolbox for readymade economic experiments - experimenter's manual. Working paper number. 21, Institute...
  • Friedman JW, Hoggatt AC (1980) An experiment in non-cooperative oligopoly, Research in Experimental Economics, vol 1. supplement JAI Press,...
  • Garcia-Gallego A, Georgantzis N (2001) Multiproduct activity in an experimental differentiated oligopoly. Int J Ind Organ 19:493-518
  • Hess J, Gerstner E (1991) Price matching policies: an empirical case. Manage Decis Econ 12:305-315
  • Hviid M, Shaffer G (1994) Do low price guarantees facilitate tacit collusion? University of Michigan working paper, 94-02
  • Hviid M, Shaffer O (1999) Hassle costs: the Achilles' heel of price-matching guarantees. J Econ Manage Strat 8:489-521
  • Holt C (1995) Industrial organization: a survey of laboratory research. In: Kagel JH, Roth AE (eds) Handbook of experimental economics, Princeton...
  • Jain S, Srivastava J (2000) An experimental and theoretical analysis of price-matching refund policies. J Mark Res 37:351-362
  • Kaplan T (2000) Effective price-matching: a comment. Int J Ind Organ 18:1291-1294
  • Logan J, Lutter R (1989) Guaranteed lowest prices: do they facilitate collusion? Econ Lett 31:189-192
  • Mañez JA (2006) Unbeatable value low-price guarantee: collusive mechanism or advertising strategy. J Econ Manage Strat 15:143-166
  • Milyo J, Waldfogel J (1999) The effects of price advertising on prices: evidence on the wake of 44 Liquormart. Am Econ Rev 89:1081-1096
  • Moorthy S, Winter RA (2002) Price-matching guarantees. Review of marketing science working papers, vol 2, No. 1, Article 2. http://www.bepress....
  • Plott C (1982) Industrial organization theory and experimental economics. J Econ Lit 20:1485-1527
  • Plott C (1989) An updated review of industrial organization: applications of experimental methods. In: Schmalensee R, Willig R (eds) Handbook...
  • Png IPL, Hirschleifer D (1987) Price discrimination through offers to match price. J Bus 60:365-383
  • Salop S (1986) Practices that (credibly) facilitate oligopoly coordination. In: Stiglitz J, Mathewson F (eds) New developments in the analysis...
  • Sargent M (1993) Economics upside-down: low price guarantees as mechanism for facilitating tacit collusion. Univ PA Law Rev 141:2055-2118
  • Smith MD, Bailey J, Brynjolfsson E (1999) Understanding digital markets. In: Brynjolfsson E, Kahin B (eds) Understanding the digital economy,...
  • Srivastava J (2001) A consumer perspective on price matching refund policies: effect on price perceptions and search behaviour. J Consum Res...
  • Srivastava J, Lurie N (2004) Price matching refund policies as signals of store price image? J Retail 80:117-128
  • Van Huyck J, Battalio R, Beil R (1990) Tacit coordination games, strategic uncertainty, and coordination failure. Am Econ Rev 80:234-248
  • Zhang J (1995) Price-matching policy and the principle of minimum differentiation. J Ind Econ 43:287-299