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Price-matching policy with imperfect information

Author

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  • Wen Mao

    (Department of Economics, Villanova University, Villanova, PA 19085, USA)

Abstract

The model of price-matching policy emphasizes on the importance of information imperfection. The demand is derived based on the assumptions that consumers have different reservation prices and different preferences over location. When a firm undercuts its competitor's price, it changes the demand structure of the market. The result shows that price-matching policies are anticompetitive, but they do not facilitate monopoly price. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Wen Mao, 2005. "Price-matching policy with imperfect information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(6), pages 367-372.
    • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:6:p:367-372
    DOI: 10.1002/mde.1233
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    References listed on IDEAS

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    1. Arbatskaya, Maria & Hviid, Morten & Shaffer, Greg, 2004. "On the Incidence and Variety of Low-Price Guarantees," Journal of Law and Economics, University of Chicago Press, vol. 47(1), pages 307-332, April.
    2. Corts, Kenneth S., 1997. "On the competitive effects of price-matching policies," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 283-299, May.
    3. Morten Hviid & Greg Shaffer, 1999. "Hassle Costs: The Achilles' Heel of Price‐Matching Guarantees," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(4), pages 489-521, December.
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    Cited by:

    1. Pio Baake & Ulrich Schwalbe, 2013. "Price Guarantees, Consumer Search, and Hassle Costs," Discussion Papers of DIW Berlin 1335, DIW Berlin, German Institute for Economic Research.
    2. Dewenter Ralf & Schwalbe Ulrich, 2016. "Preisgarantien im Kraftstoffmarkt," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(3), pages 276-288, September.
    3. Andreas Pollak, 2017. "Do Price-Matching Guarantees with Markups Facilitate Tacit Collusion? Theory and Experiment," Working Paper Series in Economics 93, University of Cologne, Department of Economics.

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