تضمین های مطابق با قیمت : تاثیر بر استراتژی قیمت گذاری در بازاری با شرکت های نامتقارن

This study analyzes the price effects of price-matching guarantees in a duopoly where consumers are heterogeneous with respect to firm loyalty, and a firm has more loyal customers than the other firm. The results show that equilibrium matching policy and pricing strategy depend on market conditions. Price-matching guarantees can result either in the form of price collusion or price discrimination.

Firms in many industries, such as sellers of consumer goods, manufacturers and sellers of industrial goods, and those who operate e-commerce, use price-matching guarantees (PMGs). Previous theoretical research on PMGs focuses on three explanations: price collusion, price discrimination, and price signaling (Manez, 2006 and Moorthy and Winter, 2006). The price collusion explanation for PMGs is that they reduce incentives of rivals to cut prices. In accordance with the view of Salop (1986), many authors demonstrate that this policy is a means to raise prices to a level that maximizes joint profits. The view that PMGs reduce price competition is dominant in literature and leads to calls for antitrust actions against firms offering such guarantees (Hviid and Shaffer, 1999 and Chen et al., 2001). Png and Hirshleifer (1987) point out the possibility of price discrimination occurring through PMGs. According to their explanation, firms use PMGs to charge different prices to each segment of consumers differentiated by their information about rivals' prices. Consumers with low search costs are well informed of prices and will claim refunds. However, those with high search costs who are unaware of rivals' prices will not make the claim. Thus, PMGs can cause firms to charge different prices among consumers. Two basic problems undermine these two explanations. First, all firms weakly prefer to adopt PMGs in a market with symmetric firms. In an asymmetric-firm market, either all firms adopt PMGs or all but the lowest-priced firms do so. However, theoretical and empirical observations are inconsistent with this view and suggest that consumers seem to associate PMGs with firms with low prices. Using a game theoretic analysis, Moorthy and Winter, 2006 and Moorthy and Zhang, 2006 find that PMGs may be useful for a low-cost firm to signal low prices to uninformed consumers in a market with firms that are differentiated horizontally and vertically. Meanwhile, Chatterjee et al. (2003) provide empirical evidence that consumers prefer markets in which one out of two firms offers PMGs to markets without them; this evidence supports the theory of low price signaling of PMGs. They also suggest that consumers think that PMGs foster competition rather than facilitate collusion. Kukar-Kinney and Grewal's (2007) experiments show that consumers associate firms with PMGs with lower prices more frequently, and these consumers are more willing to search for a lower price after purchasing an item in the presence of a PMG policy. They also claim that these effects are stronger in the bricks-and-mortar market than the online market. Second, the logic of these two explanations assumes that PMGs are effective in preventing price reductions. In contrast, some studies challenge this conventional wisdom (Corts, 1996, Hviid and Shaffer, 1999, Jain and Srivastava, 2000, Chen et al., 2001 and Arbatskaya et al., 2004). Hviid and Shaffer (1999) argue that when firms do not automatically match prices and consumers experience hassles in the process of receiving a refund, any price increase due to PMGs is smaller. They show that the collusion effect of PMGs either disappears in a market with symmetric firms or decreases in a market with asymmetric firms. Corts (1996) finds that PMGs can have not only anti-competitive but also pro-competitive effects. In his model, firms compete for two types of consumers: sophisticated and unsophisticated. Sophisticated consumers consider effective prices computed from posted prices and PMGs, whereas unsophisticated consumers consider posted prices. Without PMGs, sophisticated consumers buy from the lower-priced firm. However, the guarantees allow higher-priced firms to compete with the lower-priced one. Thus, this type of consumer becomes less important for the lower-priced firm, which sets a price closer to the optimal price for the unsophisticated consumer. As a result, when sophisticated consumers' demands are relatively elastic, prices increase; but if their demands are relatively inelastic, prices decrease. In their analysis of a market where consumers are heterogeneous with respect to firm loyalty and search cost for finding price information, Chen et al. (2001) argue that PMGs generate a competition-enhancing effect as well as a competition-dampening effect. They show that PMGs can facilitate competition, thus making firms worse off when the number of loyal customers with low search costs is large. This is because PMGs encourage those consumers to find out the rival's prices. They argue that the fact that some firms may suffer substantial losses to pay for the rebate supports their findings. This paper challenges the second assertion and focuses on the price effect of PMGs without considering the signaling effect in a market with asymmetric firms that compete for a dual population of consumers. It shows that the effects of PMGs depend not only on how they affect the purchasing behavior of consumers who prefer to buy from a particular firm, as in Chen et al. (2001), but also the number of loyal consumers of each firm. PMGs can have either price collusion or price discrimination effects depending on market conditions such as the number of loyal customers and consumers' valuation of each product. A price collusion effect, however, can be divided into two different types based on the effects on the profit of the firm with fewer loyal customers. When firms have a comparable number of loyal customers, the profits of both firms increase due to a price collusion effect, as in the market with symmetric firms. When the difference is large, the profit of a firm with more loyal customers increases, but the profit of the other firm decreases. When not only price-sensitive but also some loyal customers take advantage of matching, firms can be worse off due to a competition-enhancing effect, as specified in Chen et al. (2001). More specifically, when not only the number of loyal customers who practice matching but also the difference in the number of customers is large, the firm with more loyal customers never matches. The firm with fewer loyal customers is indifferent to PMGs because it charges a lower price than its rival. Following this introduction, Section 2 describes the model. Section 3 explains an equilibrium matching policy and pricing strategy when only price-sensitive consumers invoke matching. Section 4 demonstrates how the results change when not only price-sensitive but also loyal customers invoke matching. The final section offers a conclusion with suggestions for future research.

Using a model with asymmetric firms and a dual population of consumers, this paper shows that the effects of price-matching guarantees depend not only on how they affect the purchasing behavior of consumers, but also the number of loyal consumers. This result explains that firms need to consider the market characteristics to determine whether to adopt a price-matching policy. Depending on the number of loyal customers, price-matching guarantees can incur either price collusion or price discrimination effects. The firm with more loyal customers is at least as well off with price-matching guarantees, but the firm with fewer loyal customers can be worse off. Unlike in a symmetric-firm market, the firm with more loyal customers can use PMGs as a strategic commitment in the sense that it can induce the rival to charge a high price. Interestingly, when two firms have moderate numbers of loyal customers and the difference in the numbers between firms is small, the firm with fewer loyal customers also matches, although its profit decreases as a result. If the firm with fewer loyal customers does not offer price-matching guarantees, the rival has an incentive to attract all price-sensitive consumers by charging a low price. When some loyal customers also invoke matching, price-matching guarantees can foster competition. When both the number of loyal customers who invoke matching and the difference in the number of loyal customers between firms are sufficiently large, the firm with more loyal customers never offers to match. This study analyzes the effects of PMGs from firms' perspective. Future research can examine how PMGs alter search behavior from consumers' point of view (Jain and Srivastava, 2000, Hyun and Hong, 2002 and Ahn and Kim, 2005). Another issue for future research is the price elasticity of consumers. This study analyzes the market where the demand for loyal consumers is perfectly inelastic and that for price-sensitive consumers is partially elastic. Finding out how the impact of PMGs changes with more general consumer demand would be interesting.