Review of Industrial Organization

, Volume 26, Issue 1, pp 115–136 | Cite as

Pro-competitive Price Beating Guarantees: Experimental Evidence

  • Enrique Fatás
  • Nikolaos Georgantzís
  • Juan A. Máñez
  • Gerardo Sabater-Grande
Article

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.

Keywords

experimental oligopolies price beating guarantees 

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Copyright information

© Springer 2005

Authors and Affiliations

  • Enrique Fatás
    • 1
  • Nikolaos Georgantzís
    • 2
  • Juan A. Máñez
    • 3
  • Gerardo Sabater-Grande
    • 4
  1. 1.LEE/LINEEX and University of ValenciaSpain
  2. 2.LEE/LINEEX and Department of EconomicsUniversity Jaume I of CastellónSpain
  3. 3.LEE/LINEEX and Department of Applied Economics IIUniversity of ValenciaSpain
  4. 4.LEE/LINEEX and Department of EconomicsUniversity Jaume I of CastellónSpain

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