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Price‐matching policy with imperfect information
Author(s) -
Mao Wen
Publication year - 2005
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1233
Subject(s) - matching (statistics) , economics , monopoly , reservation , imperfect , microeconomics , price discrimination , perfect information , reservation price , price policy , industrial organization , computer science , computer network , agriculture , linguistics , statistics , philosophy , ecology , mathematics , biology
The model of price‐matching policy emphasizes on the importance of information imperfection. The demand is derived based on the assumptions that consumers have different reservation prices and different preferences over location. When a firm undercuts its competitor's price, it changes the demand structure of the market. The result shows that price‐matching policies are anticompetitive, but they do not facilitate monopoly price. Copyright © 2005 John Wiley & Sons, Ltd.