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| Author: | Hviid, M. Shaffer, G. |
| Title: | Matching own prices, rivals' prices or both? |
| Journal: | Journal of Industrial Economics
2010 : SEP, VOL. 58:3, p. 479-506 |
| Index terms: | retail industry prices costs competition |
| Language: | eng |
| Abstract: | Many retailers guarantee that they will not be undersold by rivals, extending their promise to include their own future prices. That is, many retailers couple elements of price-matching guarantees and retroactive most-favored-customer clauses. This is puzzling because the extant literature has shown that each practice alone has the potential to facilitate supracompetitive prices, and hence one might consider the two practices as substitutes. In this article, we demonstrate price-matching guarantees and most-favored-customer clauses complementing each other when offered unilaterally by a single firm, thus possibly leading to higher prices than either one could have facilitated independently. |
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