Output Decisions and Price Matching: Theory and Experiment

• 成果类型: Article
• 署名作者: Batsaikhan, Mongoljin; Tumennasan, Norovsambuu
• 署名单位: Qatar Foundation (QF); Georgetown University in Qatar; Dalhousie University; Aarhus University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2017.2788
• 发表日期: 2018
• 页码: 3609-3624
• 关键词: price matching; output decision; cournot outcome

摘要

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.