| Affiliation: | (1) LEE/LINEEX and University of Valencia, Spain;(2) LEE/LINEEX and Department of Economics, University Jaume I of Castellón, Spain;(3) LEE/LINEEX and Department of Applied Economics II, University of Valencia, Spain;(4) LEE/LINEEX and Department of Economics, University Jaume I of Castellón, Spain |
| 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.JEL Classifications: C91, L11.This revised version was published online in April 2005 with corrections to one of the authors name and to the page numbering. |
