Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88156
Authors: 
Baake, Pio
Schwalbe, Ulrich
Year of Publication: 
2013
Series/Report no.: 
DIW Discussion Papers 1335
Abstract: 
The paper deals with the competitive effects of price guarantees in a spatial duopoly where consumers can search for lower prices but have to incur hassle costs if they want to claim a price guarantee. It is shown that symmetric equilibria with and without price guarantees exist but price guarantees will have no effect on prices if search costs are low, hassle costs are high and the number of uninformed consumers is small. However, when both firms use price guarantees, there also exist payoff-dominant equilibria where both firms use mixed pricing strategies in the form of high-low pricing schemes, provided that the search costs are sufficiently high.
Subjects: 
Price Matching Guarantees
Search Costs
Oligopoly Pricing
JEL: 
L11
L13
L15
L41
Document Type: 
Working Paper

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