Price Matching Guarantees and Imperfect Consumer Information PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Price Matching Guarantees and Imperfect Consumer Information PDF full book. Access full book title Price Matching Guarantees and Imperfect Consumer Information by Jennifer Helen Haydock. Download full books in PDF and EPUB format.
Author: Jennifer Helen Haydock
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 0
Get Book Here
Book Description
Author: Jennifer Helen Haydock
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 0
Get Book Here
Book Description
Author: Joydeep Srivastava
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Many retailers offer a price-matching guarantee that promises to pay consumers the difference if they find a lower price elsewhere. This article proposes that the effectiveness of a price-matching guarantee as a signal of low store prices depends on individuals' beliefs about the degree to which other consumers in the market engage in price search, enforce price-matching guarantees, or both. Consistent with signaling theory, results of a survey and two experimental studies demonstrate that market level factors affect consumer beliefs about the extent to which others engage in price search and thereby the effectiveness of price-matching guarantees in lowering perceptions of store prices. The implications of the findings for retail strategy are discussed along with directions for future research.
Author: Sridhar Moorthy
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Are price-matching guarantees anticompetitive? This paper examines the incentives for price-matching guarantees in markets where information about prices is costly. Under some conditions the conventional explanation of price-matching announcements as facilitating collusion finds support, and is even strengthened. But our model provides an additional explanation for the practice. A price-matching guarantee may be a credible and easily understood means of communicating to uninformed consumers that a firm is low-priced. The credibility of the signal to uninformed consumers is assured by the behaviour of informed consumers. We contrast the testable implications of our model with those of the anticompetitive theories and discuss supportive evidence from an illustrative sample of retailers.
Author: Hong Yuan
Publisher:
ISBN:
Category :
Languages : en
Pages : 12
Get Book Here
Book Description
Price-matching guarantees are commonly used by sellers as promises to match the lowest price for an item that a customer can find elsewhere. In this paper, we use a market experiment approach to examine buyer search as well as sellers' pricing decisions in the presence versus absence of Price-Matching Guarantees. We use student subjects as well as real consumers in an interactive laboratory setting to trade with each other, acting as buyers and sellers. Our findings from two experiments indicate that when searchers' demand is more elastic than non-searchers, PMGs can result in more intense price competition, even when sellers are symmetric. Price-Matching sellers benefit from converting more consumers into searchers who buy a larger quantity at a lower price. The lower (average) market prices also benefit buyers. These implications should be of great interest to researchers, practitioners, and public policymakers.
Author: Nicholas H. Lurie
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
In 3 experiments, we show that price-matching guarantees affect the process through which consumers translate price information into subjective judgments. In Experiment 1, we find that price-matching guarantees appear to change the standard used in price evaluation by raising consumers' estimates of the lowest and average prices in the market. This leads consumers to perceive products and stores that offer price-matching guarantees as less expensive. In Experiment 2, we show that evaluations of product price information are affected by the presence of a price-matching guarantee only when consumers do not know the range of market prices. In Experiment 3, we extend these findings to show that consumer evaluations of the cost of products in a store, inferred on the basis of store characteristics, are also influenced by the presence of a price-matching guarantee.
Author: Subhasish Dugar
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
Get Book Here
Book Description
This study reports experiments on two competing theories of price-matching guarantees (PMGs). The dominant view (Salop [1986]) in the literature suggests that PMGs can alter pricing incentives of firms and sustain anti-competitive outcome in the market. However, a recent theoretical extension (Hviid and Shaffer [1999]) argues that this anti-competitive outcome can be undermined if buyers incur costs in invoking these guarantees. Therefore, it is natural to wonder how these conclusions stand up empirically. In order to provide empirical evidence on the impact of PMGs on prices, we study a variety of stylized market models that capture the essence of the two theories, obtain testable predictions and lay out the design of the controlled experiment. Results indicate that in the absence of any hassle costs, PMGs can sustain the predicted collusive outcome. On the other hand, the presence of buyers who incur positive hassle costs significantly mitigates, though not fully as theory predicts, the price-facilitating power of PMGs. Our findings indicate that policy makers should heed the potentially anti-competitive effects of PMG related advertisements on prices.
Author: Ernan Haruvy
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
Get Book Here
Book Description
A price matching guarantee (PMG) is a promise to match a competitor's lower price. A price beating guarantee (PBG) is a promise to beat that price. This study presents a large-scale controlled field experiment involving pairs of simultaneous auctions to examine the impact of the presence versus absence of PMGs and PBGs on consumer search, price dispersion, and willingness to pay for products. Results indicate that consumers switch less between auctions when either a PMG or a PBG is present compared to auction pairs without a price guarantee. Less switching results in higher price dispersion for auctions with either a PMG or a PBG. On average, selling prices are higher in auctions with a PMG or a PBG than in identical auctions without a PMG or a PBG. Bidder entry is higher in auctions that provide a PBG.
Author: Shakun D. Mago
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggest that the mere presence of cost asymmetries may curtail collusive behavior.
Author: Subhasish Dugar
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Price-matching guarantees have been alleged to sustain collusive prices in a homogenous product market. Theories in this literature also suggest that there exists multiple equilibria (i.e., a set of price equilibria between the competitive and the monopoly price) when all sellers adopt these guarantees in such a market. Theoretical prediction in this case fails to pin down the actual behavior of players a priori. This paper illustrates the essential role of controlled experiment in testing the collusive theory of price matching guarantees and thereby shedding light on the embedded equilibrium selection problem. In particular, this paper studies two highly stylized market models, obtains testable predictions and lays out the design of the controlled experiment. Results indicate that these guarantees facilitate collusion among sellers and thus solve the equilibrium selection problem considerably.
Author: Subhasish Dugar
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
In this study, we experimentally investigate whether the collusion-facilitating nature of price-matching guarantees survives the reasonable modification of hassle costs incurred by buyers to enact these guarantees. Hviid and Shaffer [1999] (HS) argue that the presence of an arbitrarily small number of positive hassle costs buyers undermines incentives for collusion in symmetric markets. To evaluate the impact of hassle costs, we develop four stylized one-shot price competition models that have sharp testable predictions. While the first model directly captures the implications of HS, the last three models deal with the theoretical analysis of hassle costs in symmetric markets by introducing varying proportions of positive and zero hassle costs buyers, previously unexplored in the literature. Although theory predicts that the competitive price should emerge in equilibrium in all four models, we find significant price differences in the experiment.
