Price Matching Guarantees
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Price Matching Guarantees And Imperfect Consumer Information
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Author : Jennifer Helen Haydock
language : en
Publisher:
Release Date : 2009
Price Matching Guarantees And Imperfect Consumer Information written by Jennifer Helen Haydock and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Consumer behavior categories.
Price Matching Guarantees As Signals Of Low Prices
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Author : Joydeep Srivastava
language : en
Publisher:
Release Date : 2007
Price Matching Guarantees As Signals Of Low Prices written by Joydeep Srivastava and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
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.
Price Matching Guarantees
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Author : Sridhar Moorthy
language : en
Publisher:
Release Date : 2013
Price Matching Guarantees written by Sridhar Moorthy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
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.
Price Matching Guarantees And Consumer Evaluations Of Price Information
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Author : Nicholas H. Lurie
language : en
Publisher:
Release Date : 2007
Price Matching Guarantees And Consumer Evaluations Of Price Information written by Nicholas H. Lurie and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
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.
Measuring The Impact Of Price Matching Guarantees On Price Dispersion And Willingness To Pay In Auctions
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Author : Ernan Haruvy
language : en
Publisher:
Release Date : 2015
Measuring The Impact Of Price Matching Guarantees On Price Dispersion And Willingness To Pay In Auctions written by Ernan Haruvy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
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.
Price Matching Guarantees With Endogenous Search
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Author : Hong Yuan
language : en
Publisher:
Release Date : 2015
Price Matching Guarantees With Endogenous Search written by Hong Yuan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
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.
Competitive Price Matching Guarantees
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Author : Arcan Nalca
language : en
Publisher:
Release Date : 2009
Competitive Price Matching Guarantees written by Arcan Nalca and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
The Effects Of Price Matching Guarantees On Prices
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Author : Subhasish Dugar
language : en
Publisher:
Release Date : 2006
The Effects Of Price Matching Guarantees On Prices written by Subhasish Dugar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
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.
Hassle Costs Price Matching Guarantees And Price Competition
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Author : Subhasish Dugar
language : en
Publisher:
Release Date : 2005
Hassle Costs Price Matching Guarantees And Price Competition written by Subhasish Dugar and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.
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.
Price Matching Guarantees And Collusion
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Author : Luís M. B. Cabral
language : en
Publisher:
Release Date : 2021
Price Matching Guarantees And Collusion written by Luís M. B. Cabral and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with Consumer behavior categories.
On May 27, 2015, the Shell network of gas stations in Germany introduced a Price Matching Guarantee (PMG) available to its card-carrying members. In the ensuing weeks, a series of attempts at tacit collusion took place, typically with stations increasing prices at around 12 noon by 3 cents. In this paper, we argue that the juxtaposition of these two events is not a mere coincidence. We first present a theoretical model to argue that a PMG can be a collusion enacting practice. We then test various predictions of our theoretical model. Our source of identification is geographical variation in the presence of Shell stations (the chain that enacted the PMG) as well consumer demographics. Our empirical tests are consistent with the theoretical predictions, showing effects that are both statistically and economically significant.