Output decisions and price matching: theory and experiment
Article
Batsaikhan, M. and Tumennasan, N. 2018. Output decisions and price matching: theory and experiment. Management Science. 64 (8), pp. 3609-3624. https://doi.org/10.1287/mnsc.2017.2788
Type | Article |
---|---|
Title | Output decisions and price matching: theory and experiment |
Authors | Batsaikhan, M. and Tumennasan, N. |
Abstract | We study the effects of price matching in a setting in which each firm selects both its price and output, simultaneously. We show that the availability of a price-matching option leads to the Cournot outcome in this setting. Our experimental study confirms this result in the laboratory. Our finding is a stark contrast to the one obtained in the standard price competition that the most likely market price in the presence of a price-matching option is the monopolistic price. In addition, we show that price matching benefits consumers in markets with a large number of firms. If a market has a few firms, then the effects of price matching on consumers depend on the market demand and cost functions. Thus, our study suggests that the effect of price matching depends on the strategic variables of the firms. |
Keywords | price matching; output decision; cournot outcome |
Sustainable Development Goals | 9 Industry, innovation and infrastructure |
Middlesex University Theme | Creativity, Culture & Enterprise |
Publisher | Institute For Operations Research and the Management Sciences (INFORMS) |
Journal | Management Science |
ISSN | 0025-1909 |
Electronic | 1526-5501 |
Publication dates | |
Online | 03 Aug 2017 |
Aug 2018 | |
Publication process dates | |
Accepted | 17 Feb 2017 |
Deposited | 25 Jan 2024 |
Output status | Published |
Digital Object Identifier (DOI) | https://doi.org/10.1287/mnsc.2017.2788 |
Web of Science identifier | WOS:000440922200009 |
Language | English |
https://repository.mdx.ac.uk/item/v65w3
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