Pro-competitive price beating guarantees

Enrique Fatas, Nikolaos Georgantzis, Juan A. Máñez, Gerardo Sabater-Grande

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

We report experimental results on duopoly pricing with and without price beating guarantees (PBG). In two control treatments, price beating is either imposed as an industry-wide rule or offered as a business strategy. Our major finding is that when price beating guarantees are imposed as a rule or offered as an option, effective prices are equal to or lower than those in a baseline treatment in which price beating is forbidden. Also, when price beating is treated as a business strategy, less than 50% of subjects adopted the guarantee, suggesting that, subjects realize the pro-competitive effects of the guarantee.
Original languageEnglish
Pages (from-to)115-137
Number of pages23
JournalReview of Industrial Organisation
Volume26
Issue number1
DOIs
Publication statusPublished - 2005

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