frictionless commerce a comparison of internet and conventional retailers there have been many claims that the internet represents a new nearly frictionless market our research empirically analyzes the characteristics of the internet as a channel for two categories of homogeneous products books and cds using a data set of over 8 500 price observations collected over a period of 15 months we compare pricing behavior at 41 internet and conventional retail outlets we find that prices on the internet are 9 16 lower than prices in conventional outlets depending on whether taxes shipping and shopping costs are included in the price additionally we find that internet retailers price adjustments over time are up to 100 times smaller than conventional retailers price adjustments presumably reflecting lower menu costs in internet channels we also find that levels of price dispersion depend importantly on the measures employed when we compare the prices posted by different internet retailers we find substantial dispersion internet retailer prices differ by an average of 33 for books and 25 for cds however when we weight these prices by proxies for market share we find dispersion is lower in internet channels than in conventional channels reflecting the dominance of certain heavily branded retailers we conclude that while there is lower friction in many dimensions of internet competition branding awareness and trust remain important sources of heterogeneity among internet retailers

product differentiation in a bertrand edgeworth duopoly abstract in a bertrand edgeworth model with homogeneous goods an equilibrium in pure strategies does not exist non existence of a pure strategy equilibrium is not solely due to the homogeneous goods assumption in this paper i consider a bertrand edgeworth model with product differentiation and i parametrize when an equilibrium exists journal of economic literatureclassification numbers d4 l1

an experimental examination of competitor based price matching guarantees we use experimental methods to demonstrate the anti competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies our findings establish that when costs are symmetric price matching guarantees significantly increase market prices in markets with cost asymmetries guaranteed prices remain high relative to prices without the use of guarantees but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference lesser use of guarantees combined with lower average prices and slower convergence to the collusive level suggest that the mere presence of cost asymmetries may curtail collusive behavior

price discrimination through offers to match price in this paper a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop if the list price elsewhere is lower the firm will be successful in discrimination the list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers furthermore if sellers coordinate they discriminate more efficaciously and increase their profits by increa sing their total sales copyright 1987 by the university of chicago

a note comparing the capacity setting performance of the kreps scheinkman duopoly model with the cournot duopoly model in a laboratory setting abstract the paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments cournot c duopolies quantity precommitment and a price determined to clear the market are contrasted with kreps scheinkman ks duopolies quantity precommitment and posted prices inexperienced participants in ks markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in c markets with experience the differences disappear

an experimental and theoretical analysis of price matching refund policies abstract price matching refund policies or offers by firms to match competitor s prices are common in both consumer and industrial marketing much of the previous theoretical work in economics suggests that price matching refunds are associated with higher prices in contrast the trade press postulates that price matching policies are associated with lower prices given these inconsistent views regarding price matching policies the authors experimentally examine how consumers view and interpret such policies and then develop a model that incorporates these consumer interpretations as well as asymmetries across stores in the model the asymmetry across stores is the key to deriving the conditions under which a signaling equilibrium exists in the presence of price matching policies the critical point is that the competition reducing and price discrimination effects which seem to form the basis of most of the previous theoretical literature can be counteracted by the presence of differentiated firms

facilitating practices the effects of advance notice and best price policies even if firms in a market choose discount prices noncooperatively the use of most favored customer and meet or release contracts enables those firms to adopt quantity choice strategies consequently there can be a range of list prices that are impervious to unilateral nonselective discounts but this range does not include prices above the level determined in a cournot equilibrium the practice of advance public notification of list price increases can facilitate the establishment of such supracompetitive list prices as was argued in the recent ftc ethyl case the possibility of offering discounts selectively results in a much more competitive situation

guaranteed lowest prices do they facilitate collusion abstract the effects of a policy guaranteeing lowest price are analyzed in a two stage game where firms first decide whether to adopt such a policy and then choose prices symmetric and asymmetric games are solved to examine the extent to which prices can rise to collusive levels

price matching policy and the principle of minimum differentiation this paper shows that if duopolists are allowed to choose their product locations a price matching policy and their prices sequentially and independently both tacit collusion and minimum differentiation occur copyright 1995 by blackwell publishing ltd

on the competitive effects of price matching policies abstract this paper challenges the conventional wisdom that price matching policies lead to supracompetitive prices by reducing firms incentives to undercut rivals i argue that price matching and price beating policies are more appropriately viewed as a means of price discrimination and develop a model that demonstrates their use as such analysis of this model shows that in contrast to the results of the existing literature price matching and price beating may raise or lower equilibrium prices relative to the equilibrium in which firms may not adopt such policies

price matching in a model of equilibrium price dispersion some sellers announce openly to prospective buyers that they will match any competitor s lower price on similar products this practice is visible among many retailers of consumer durables such as tv sets stereo components cameras and personal computers in more covert and informal forms price matching is ubiquitous it exists whenever individual sellers of a product are known to be generally willing to lower their prices when confronted by prospective buyers who can demonstrate information of lower prices elsewhere attempts to demonstrate and verify such information usually constitute part of the haggling process one often wonders will prices consumers ultimately pay indeed be lower with such haggling will apparently aggressive price matching strategies result in lower or higher equilibrium prices this paper deals with an environment in which information is not perfect and buyers engage in costly sequential search it will be shown that with price matching prices ultimately charged to consumers are higher the crucial assumption here is that buyers marginal search cost increases with the number of searches already performed with this assumption the main idea driving our results is as follows in the presence of increasing marginal search cost price matching encourages search therefore there will be more prospective buyers who will have performed a larger number of searches their marginal search cost will be higher on the average thus firms will be able to take advantage of this and charge higher prices but why would price matching encourage search if marginal search cost is increasing the answer lies in that price matching implies costless recall in sequential search models with consumers facing a known price distribution and constant marginal search cost whether recall is costless or costly is immaterial for then consumers optimal strategy is a constant reservationprice strategy implying that prices rejected earlier will never be acceptable the desire to recall never arises so that it does not matter to the searcher whether recall is costly or costless in such an environment firms do not have the incentive to offer price matching but as rothschild 7 has cautioned us the two assumptions of costly and costless recall are not always interchangeable they are not when marginal search cost is increasing for then if a consumer having a price

technology imports and r d efforts of korean manufacturing firms abstract this paper analyzes the relationship between technology imports and r d efforts of korean manufacturing firms by a two stage method in the first stage using a sample representing the whole population of firms the paper shows that firms importing technology tend to commit themselves to r d efforts through having formal r d institutes in the second stage it shows that among firms with formal r d institutes technology imports have non complementary relationship with r d efforts moreover when technology imports are considered interactively with international inventive activity they turn out to have rather a substitutive relationship with r d efforts

structural breaks in renewable energy in south africa a bai perron break test application abstract in order to remedy the continuous problem of sustainable energy supply the south african government committed itself to pursuing renewable energies re as a viable alternative to traditional sources such as fossil fuels the aim of this study is to understand whether the policies pursued by the south african government in the period 1990 2010 have had any effect on the consumers and producers of re to do so the bai perron 1998 2003 break test methodology is employed to examine the evolution of re production and consumption deviations from the base case are then explained in the south african economic and policy context

renewable energy certificate mechanism in india a preliminary assessment abstract the indian national action plan for climate change napcc envisages several measures to address global climate change one of the important measures identified involves increasing the share of renewable energy in total electricity consumption in the country this would mean napcc envisages renewable energy to constitute approximately 15 of the energy mix of india by 2020 to achieve the target set by the napcc indian ministry of power launched renewable energy certificate rec mechanism in november 2010 however participation in the rec markets is low and recs have failed to attract significant investment so far in this study a preliminary attempt has been made to assess the performance of existing rec mechanism in india after highlighting the salient features of the indian renewable energy policy framework a brief description of renewable purchase obligation rpo and source specific rpos for different states is discussed along with an overview of rec market in india to date the performance of indian rec mechanism is evaluated by cost competiveness decentralized distributed generation and renewable energy portfolio diversity and their effectiveness has also been measured on the basis of the available data although it is difficult to make any conclusive remark on the success or failure of rec mechanism due to its short experience this study examines the process to date to come out with some recommendations which can be used to fine tune the functioning of existing rec market in india for instance rec price bounds should be revised because it has been not explicitly supporting cost competiveness by offering 60 33 higher average price than the existing average feed in tariff fit it is also observed that state wise contribution in registered capacity is skewed towards few states like tamil nadu 27 maharashtra 23 and uttar pradesh 22 which puts pressure on policy makers to restructure the existing rec mechanism

agglomeration advantages and capability building in industrial clusters the missing link accumulation of technological capability is crucial for industrial growth and competitiveness of firms particularly in the context of liberalisation and increasing international economic integration the article sheds new light on the forces driving capability building by complementing the micro economic perspective on learning with a meso economic perspective that takes account of interaction effects arising from firms embeddedness in regional networks the missing link at the interface between the two levels is explored by means of a taxonomy linking various agglomeration advantages to investments in technological effort the framework results in new policy relevant insights about the factors underpinning the acquisition of capabilities in comparison to conventional studies a case study about farm equipment manufacturing in pakistan s punjab province is used as an empirical illustration

technological effort and disembodied technology exports an econometric analysis of inter industry variations in india abstract this paper attempts a preliminary test of the determinants of indian technological capability as measured by disembodied technology exports by a sample of the largest private sector quoted companies in india after placing the study in the context of research on the nature of technological activity in developing countries the authors describe the variables which they have used to explain inter industry variation in technology exports the results of a preliminary statistical investigation are presented despite acknowledged limitations of data the authors are able to suggest some interesting tendencies which could be the subject of further investigation a formal rd b skill and scale requirements appear to promote technological development rather than retard it c the presence of foreign ownership does not seem to inhibit technological development or technology exports

quantity precommitment in an experimental oligopoly market abstract the paper describes an experiment designed to test if the equilibrium in a market characterized by capacity precommitment followed by price competition as in the kreps and scheinkman model conforms with the outcome predicted by that model which is that capacities coincide with cournot output levels sessions were run with capacity precommitment in inexperienced and experienced triopoly markets the conclusion is that with inexperienced subjects capacity choices are more rivalistic than the model suggests but in line with those of the cournot experiments by fouraker and siegel with experienced subjects capacities are quite close to the prediction of the kreps and scheinkman model

price matching guarantees are price matching guarantees anticompetitive we examine the incentives for price matching guarantees in markets where information about prices is costly the conventional explanation of price matching as facilitating cartel pricing finds some theoretical support but our model provides an additional explanation a price matching guarantee may be a credible and easily understood means of communicating to uninformed consumers that a firm is low priced the credibility of the signal is assured by the behavior of informed consumers we contrast the testable implications of our model with those arising from two theories of price matching as anticompetitive and show that available evidence supports the signalling theory

contractible contracts in common agency problems this article analyses contractual situations between many principals and many agents the agents have private information and the principals take actions principals have the ability to contract not only on the reports of the agents but also on the contracts offered by other principals contracts are required to be representable in a formal language the main result of the article is a characterization of the allocations that can be implemented as equilibria in our contracting game we then restrict attention to exclusive contracting environments in which the agent may select the contract of at most one principal in this setting our characterization result implies that principals can collude to implement the monopolist outcome finally in general equilibrium contracts turn out to be incomplete that is a contract will restrict the action space of a principal but will not necessarily determine a single action

a reapraisal of the capital goods sector in hong kong the case for free trade abstract this paper was provoked by an earlier one by fransman 1982 in which he examined the functioning of the capital goods sector in hong kong and came to the conclusion that it needed special protection by the government to allow it to reap the benefits of externalities essential for increasing its design and production capabilities statistical evidence is provided indicating that the capital goods sector as conventionally defined is prospering even following fransman 1982 and equating the capital goods sector with the machine producing sector the latest survey of production indicates considerable dynamism his case for infant industry protection is further weakened by consideration of the nature of the particular industrial structure of hong kong and the quality of the social relations that prevail between entrepreneurs it is argued that the costs of singling out the capital goods sector for special treatment in terms of the impact of the highly competitive export oriented manufacturing sector are likely to be high while the theoretical benefits from externalities are liable to be illusory in a small economy

price match announcements in a consumer search duopoly using a model of sequential search we show that announcements to price match raise prices by altering consumer search behavior first price matching diminishes firms incentives to lower prices to attract consumers who have no search costs second for consumers with positive search costs price matching lowers the marginal benefit of search inducing them to accept higher prices finally price matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium price increases grow in the proportion of consumers who invoke price matching guarantees and in the level of equilibrium asymmetry

on the incidence and variety of low price guarantees abstract this paper provides evidence of the incidence and variety of low price guarantees promises to match or beat a rival s price using data obtained from newspaper advertisements in 37 metropolitan areas in the united states we have a total of 515 low price guarantees in our sample we document their features and we infer firms motives and effects from these features the evidence suggests that the majority of low price guarantees are not consistent with their use as a facilitating device because they tend to apply only to rival firms advertised prices or they are associated with high hassle costs the evidence also suggests that price beating and price matching guarantees differ significantly in their features the former are associated with higher hassle costs apply disproportionately to rival firms advertised prices and are more likely to allow postsale search than are price matching guarantees

promoting technological capability in the capital goods sector the case of singapore abstract this paper contributes to the new interest in technological change in semi industrial countries by examining technological capability in the machine producing sector in singapore the difficulties involved in conceptualizing and measuring technological capability in less developed countries are discussed and the case study material is then presented particular attention is paid to the role of government promotion in the development of technological capability in this connection the present study provides a useful contrast with the position in hong kong studied in an earlier paper while both singapore and hong kong have instituted a near free trade regime there is a far greater degree of government intervention in the former than in the latter case by contrast the governments of both south korea and taiwan have granted selective protection in order to encourage some kinds of domestic machine production the paper ends with some critical comments regarding the singapore government s policy towards the machine producing sector

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

durable good monopoly and best price provisions best price provisions guarantee buyers that the prices they pay are the lowest available if the seller subsequently cuts price then each previous buyer is entitled to a refund a durable good monopolist who offers certain forms of these provisions can construct a consistent plan yielding the same profits as rental agreements and contracts with explicit quantity commitments the provisions require special circumstances to be practical but they are simple and effective and appear in a variety of economic settings three applications are discussed international commodity agreements markets for electric turbogenerators and markets for financial claims copyright 1990 by american economic association

strategies to promote renewable energy in brazil the present study is the result of recent research that has been developed in brazil in cooperation with international research centers the aim is to analyze the best strategies for maintaining the high share of renewable sources in brazil s electric power generation system the results show that for the time horizon considered the country still has plentiful energy resources available notably its hydroelectric potential and that the introduction of mitigation measures in the electricity sector has only a small impact on the price of electricity the study also shows that the country has made a significant contribution to the struggle against global warming

dynamic duopoly with best price clauses this article investigates best price clauses as a strategic devise to facilitate collusion in a dynamic duopoly game best price clauses guarantee rebates on the purchase price if a customer finds a better price after his purchase two different price clauses are distinguished most favored customer and meet or release i examine the collusive potential of both clauses in a finite horizon duopoly model with homogeneous durable goods in each period new consumers enter the market i show that in this context meet or release clauses have a greater anticompetitive potential than most favored customer clauses

advance production and cournot outcomes an experimental investigation abstract an experiment designed to assess the effects of advance production decisions on posted offer market performance is reported six of the twelve triopolies were conducted under standard posted offer rules in the remaining markets sellers made binding production commitments prior to posting prices an alteration that shifts the unique stage game nash equilibrium from the competitive to the cournot outcome as predicted advance production decisions raised prices and lowered output nevertheless stable cournot outcomes were never observed

how low is a guaranteed lowest price a game based on the bertrand duopoly model is constructed to study the effects of price guarantee policies before it chooses a list price a firm can make a binding commitment to match or beat its competitor s price the effectiveness of these price guarantee policies in facilitating price collusion depends on the solution concept used furthermore there exists an equilibrium in which neither firm offers any price guarantees and each firm sets price equal to marginal cost

output decisions and price matching theory and experiment 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 data and the online appendix are available at https doi org 10 1287 mnsc 2017 2788 this paper was accepted by eric anderson marketing

learning and the capital goods sector under free trade the case of hongkong abstract attention is focused on technological change and attendant learning processes in the more industrialized third world countries the importance of relatively simple learning processes is stressed and the conditions necessary for facilitating more complex forms of learning particularly protection and promotion are examined here it is shown that the capital goods sector is of central importance the case study material deals with the machine producing sector in hong kong chosen as the representative case of free trade and minimal government intervention and comparison is made with learning processes in a number of other more industrialized third world countries including india argentina and taiwan in the final section the implications of the discussion of learning for theories and techniques of investment allocation including social cost benefit analysis the effective rate of protection and the related domestic cost of foreign exchange are examined

automated pricing rules in electronic posted offer markets i introduction electronic commerce affords the opportunity to automate the process by which buyers and sellers engage in an exchange at a mutually agreeable price for example buyers on the internet can use software agents to automate the gathering of information on price and other product attributes in online retail markets that are traditionally organized as posted offer markets 1 this technology obviously reduces the consumer transaction costs of comparing prices which presumably would induce stronger competition among sellers however as hal varian remarked in the e commerce magazine wired everybody thinks more information is better for consumers that s not necessarily true bayers 2000 215 the same technology that reduces consumer transaction costs can be employed by sellers to automate the monitoring of rivals prices which might mitigate or even overwhelm the procompetitive effect of reduced consumer search costs in addition electronic markets grant more than just ideal information on competitors pr ices with electronic commerce a seller can commit to implementing an automated algorithm that could possibly sustain tacitly collusive prices in this article we study the supply side effects of three automated pricing algorithms that use price information as an input that could be retrieved from consumer price gathering technology in an electronic market two of the three algorithms that we study have the theoretical potential to facilitate collusion low price matching and a trigger strategy the third and presumably more competitive algorithm which we refer to as undercutting is drawn from the common retail practice of beating competitors prices using the experimental method this article explores how sellers deploy these three automated pricing algorithms in electronic markets more specifically we ask 1 do sellers prefer to set their price manually or to adopt automated algorithms that adjust price more frequently 2 are markets with automated pricing algorithms more competitive or less competitive than markets with manually posted prices 3 does increased commitment to an automated pricing mechanism facilitate tacit collusion to study the impact of automated pricing on seller behavior we base our work on the model of price dispersion in retail markets by varian 1980 thus our article also explores how well a theory of mixed strategy pricing organizes the behavior of sellers in a market with a nearly continuous stream of differentially informed fully revealing customers 2 as a preview of the results we find that 1 sellers employ automated pricing algorithms more often than they manually set their own price 2a automated undercutting leads to prices similar to the game theoretic prediction 2b automated low price matching generates prices significantly higher than the game theoretic prediction 2c automated trigger pricing results in market prices below the game theoretic prediction and 3 greater commitment to automated low price matching shifts prices closer to the joint profit maximizing outcome the structure of the article is as follows section ii presents the three automated pricing algorithms we consider the experimental design and procedures are in section iii section iv presents and discusses our results and section v briefly concludes ii automated pricing algorithms the market environment is motivated by the model of sales in varian 1980 3 in this model there are n sellers that supply buyers who each desire to purchase at most one unit of a homogeneous product each seller has a commonly known constant marginal cost c of supplying a unit to a buyer and posts a price p which the buyer can accept or reject the private value v for each nonstrategic buyer is assumed to be a random variable drawn independently from a known uniform distribution with a support v v buyers differ based on the number of firms from which price quotes are received prior to making a purchasing decision

competitive price matching guarantees equilibrium analysis of the availability verification clause under demand uncertainty price matching guarantees involve a retailer matching the lower price of a competitor for an identical product in reality retailers often make such guarantees contingent on the verification of product availability at the competitor s location and decline a price match request if the product is not available there this creates certain consternation on the part of customers in this paper we investigate the availability contingency strategy from the perspectives of both the retailers and the customers our analysis shows that availability contingency clauses intensify inventory competition between retailers and reinstitutes price competition which is otherwise eliminated by unconditional price matching guarantees consequently despite what customers may think about the availability verification it actually increases their surplus on the other hand such a clause reduces profits and hence is not the equilibrium strategy for retailers subsequently we discuss how a likely customer behaviour pattern may be a plausible explanation regarding the use of the clause by the retailers in practice this paper was accepted by yossi aviv operations management

fostering the capital goods sector in ldcs abstract the conventional arguments in favour of the production of capital goods by ldcs are based on comparative advantage the possibility of designs appropriate to indigenous factor proportions and the externalities conferred on other sectors these and other arguments are inducing the governments of many middle income countries to more intensively foster the development of the machinery sector this paper examines the analytic and empirical bases of the conventional arguments and finds a considerably more complex picture than that contained in earlier studies

advance production inventories and market power an experimental investigation i introduction bertrand edgeworth games are an important part of any industrial organization economist s toolkit the unilateral market power created by capacity constraints represents one of economists primary methods for modeling supra competitive prices as a static equilibrium outcome in a price setting game 1 the standard bertrand edgeworth model however rather restrictively assumes that production is to demand and that goods are immediately perishable in the broad swath of modern economies that includes the production and sale of physical products these assumptions are often not even approximately satisfied goods are routinely produced prior to being offered for sale at retail establishments similarly while the effective shelf life of many products is quite short relatively few products perish immediately and many have effective shelf lives that extend throughout a sales season if not longer this paper reports a laboratory experiment conducted to assess the effects of having sellers make production decisions in advance rather than to demand and allowing sellers to carry unsold units across periods on market power in a bertrand edgeworth pricing game by way of preview we find that both advance production and an inventory option prominently affect market outcomes advance production reduces profits relative to a baseline condition while an inventory option reduces both prices and profits these results are important as they suggest that deviations from the standard oligopoly structures that routinely arise in natural contexts may fundamentally affect market performance we organize the paper as follows following a brief review of the pertinent literature in section ii we outline equilibrium predictions for baseline advance production and inventory treatments in section iii section iv describes the experimental design and procedures and section v presents the experimental results the paper concludes with a short section vi ii background a theoretical literature economists have long recognized the restrictiveness of the standard price setting oligopoly models shubik 1955 for example argues that when evaluating price setting duopolies economists should consider price quantity games where sellers simultaneously post prices and quantities in addition to games where price is the only decision variable 2 levitan and shubik 1978 compute the mixed strategy equilibrium for a duopoly given advance production and unlimited capacities more recently tasnadi 2004 analyzes the case of advance production for capacity constrained duopolists pertinent to the present investigation tasnadi shows that under very general conditions advance production raises prices but leaves seller profits unaffected the only theoretical work that analyzes the links between product durability and market prices of which we are aware is a stream of literature following coase 1972 regarding the effects of product durability on monopoly power specifically given sufficiently patient consumers the coase conjecture suggests that infinite durability will eliminate monopoly power analytical results are driven by consumers who drive prices down by waiting for future discounts 3 to the best of our knowledge no one has analyzed the effects of product durability on production and pricing incentives for capacity constrained price setting duopolists b experimental literature the relevant experimental literature consists of three strands a first strand consists of a series of papers establishing that laboratory sellers recognize and exercise the unilateral market power induced by capacity constraints pertinent seminal references are davis and holt 1994 and kruse et al 1994 while some relevant related papers include davis holt and villamil 2002 davis and wilson 2000 and wilson 1998 a second strand of the experimental literature studies the effects of advance production on posted price markets

can low price guarantees deter entry abstract this paper examines the strategic use of low price guarantees lpgs as an entry deterrent the entire space of contemporaneous lpg messages is partitioned according to their ability to deter entry and or increase the incumbent s profits while most price matching and price beating guarantees cannot deter entry into a perfectly contestable market there do exist special classes of price beating guarantees that enable the incumbent to prevent entry interestingly both price matching and price beating can be a part of the incumbent s strategy in subgame perfect equilibria of the game where the firms choose lpgs from 14 classes defined in the paper

comparison of renewable energy policy evolution among the brics abstract renewable energy policy evolution of the brics is analyzed and assessed quantitatively based on the bai and perron s structure breaks test results indicate no break for time series of renewable production in russia while series of renewable production and consumption are characterized as segmented trend stationary processes around one or two structural breaks in brazil india and china renewable policies in brazil and china have long term positive effects on renewable energy production and consumption improving the two variables growth rate the time series structure change of indian renewable energy production is complicated and the long term impact of energy policies on renewable production is contradictory at the two breakpoints russian renewable policies are not working reducing renewable energy consumption growth in the long term empirical analysis suggests policy implications that china should mandate the promotion of renewable energy develop biomass energy on the base of comparative advantage and enhance renewable energy industry chain integration

inventory dynamics and supply chain coordination this paper extends the theory of supply chain incentive contracts from the static newsvendor framework of the existing literature to the simplest dynamic setting a manufacturer distributes a product through retailers who compete on both price and fill rates we show that inventory durability is the key factor in determining the underlying nature of incentive distortions and their contractual resolutions when the product is highly perishable retailers are biased toward excessive price competition and inadequate inventories vertical price floors or inventory buybacks subsidies for unsold inventory can coordinate incentives in both pricing and inventory decisions when the product is less perishable the distortion is reversed and vertical price ceilings or inventory penalties can coordinate incentives

effective price matching a comment abstract corts economic lett 47 1995 417 showed that when allowing for price beating policies in addition to price matching policies the competitive outcome prevails in lieu of monopoly pricing i show by expanding the strategy set further to include effective price strategies the possibility of monopoly pricing is restored

renewable energy in russia markets development and technology transfer abstract five potential markets in russia offer commercial opportunities for renewable energy that are nearly cost competitive with conventional forms of energy grid connected electricity from wind power electricity for villages and small settlements from hybrid wind diesel and biomass district heating for buildings from biomass hot water for buildings from solar thermal and electricity and heat from geothermal over the last several decades the soviet union conducted research and development on several forms of renewable energy technological infrastructure scientific and technical knowledge engineering and technical skills and factories and equipment are all well developed assets but the translation of these assets into commercial renewable energy technologies and markets is a problem because associated market oriented skills and institutions are still lacking many barriers also exist including lack of information and demonstration experience lack of long term commercial financing a perceived climate of high investment risk technology acceptance some direct and indirect energy price subsidies most energy prices have risen to market levels utility monopolies and the absence of operational regulatory frameworks for independent power producers and historical enterprise specialization market intermediation is very important for renewable energy investments and technology transfer providing the knowledge information skills services financing and analysis that is necessary to overcome barriers joint ventures with foreign multinational corporations represent another important means for overcoming barriers one that takes advantage of russian technological capabilities four case studies illustrate the most prominent examples of renewable energy technology transfer with russia ukraine and the baltic states during the period 1992 1996

acquisition of technological capability in development a quantitative case study of pakistan s capital goods sector there is by now a substantial body of literature that points to the importance of technological capability acquisition for industrial development this literature however is almost exclusively based on qualitative case studies this paper addresses the lack of objective quantitative measurement and testing using data from a survey among capital goods manufacturers in pakistan it develops quantitative proxies for technological capability and various learning mechanisms that are believed to contribute to its emergence these are used in a regression analysis aimed at finding statistical support for the contention in the literature that capability results from an effortful learning process and at analyzing the main dimensions of that process

on the use of low price guarantees to discourage price cutting abstract this paper formulates a novel test to assess whether and to what extent firms might be using low price guarantees to discourage their rivals from cutting prices the test is based on a comparison of paired observations of advertised prices that are set by competing firms at the same point in time on similar items where one price is set by a firm that has a low price guarantee and the other by a firm that does not have a low price guarantee using data on retail tire prices we find that the majority of paired observations involving firms that have price matching guarantees are consistent with what one would expect if firms were using them to discourage price cutting whereas the majority of paired observations involving firms that have price beating guarantees are not this suggests that price matching and price beating guarantees may be serving different purposes the evidence also suggests that guarantees that apply to advertised prices only may be serving different purposes than guarantees that apply to both advertised and selling prices

experimental duopolies under price guarantees in a symmetric differentiated experimental duopoly we test the ability of price guarantees pgs to raise prices above the competitive levels different types of pgs aggressive and soft price beating and price matching are implemented either as an exogenously imposed market rule or as a business strategy our results show that pgs may lead close to the collusive outcome depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the aggressive price beating type

different selling strategies in bertrand oligopoly abstract i analyse a bertrand oligopoly game where firms can choose between selling strategies i price announcements ii price announcements and offers to price match i establish the set of nash equilibria and show that only the monopoly price nash equilibrium satisfies iterative dominance

matching own prices rivals prices or both many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices that is many retailers combine elements of both price matching guarantees and retroactive most favored customer clauses this is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices and thus one might think the two practices are substitutes in this paper we show that price matching guarantees and most favored customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself

revealed and stated preferences for co2 emissions reduction the missing link abstract in this paper we combine data collected from two strands of literature dealing with revealed preferences expressed by conventional vehicle drivers for fuel price variation and stated preferences expressed by consumers for alternative fuel vehicles we employ a meta analysis approach drawing data on 30 primary studies reflecting two important policy interventions which are fuel price taxation and subsidies for alternative fuel vehicles this is a new contribution in environmental and energy economics in that we rescale all primary information into a unique index which captures consumers economic attitude towards carbon dioxide co2 emission reduction in monetary terms focusing on the transport sector we compute the implicit price for the avoidance of a kilogram of co2 emissions named pco2 explaining the existing heterogeneity from several points of view the results of the meta analysis show that contextual and individual characteristics influence the implicit price for co2 emissions avoidance this implicit price is on average positive in the case of revealed preferences studies whereas it is negative in the stated preferences studies although there are some important geographical differences our results show that fuel taxes could be an important additional instrument for environmental policy

on the robustness of the argument that price matching is anti competitive abstract the existing literature suggests that price matching leads to monopoly prices i show that this argument relies on an arbitrary and unrealistic restriction of the firms strategies in particular if firms may adopt price beating policies the competitive outcome prevails

price matching guarantees as a direct signal of low prices if consumers believe that stores offering price matching guarantees pmgs charge low prices high search cost consumers will purchase from pmg stores this leads pmg stores demand to be less pric

price matching guarantees and consumer search abstract this paper examines the effect of price matching guarantees pmgs on market outcomes in a sequential search model pmgs are simultaneously chosen with prices and some consumers shoppers know the firms decisions before buying while others non shoppers enter a shop before observing the price and whether or not the firm has a pmg in such an environment pmgs increase the value of buying the good and therefore increase consumers reservation prices this increase is so large that even after accounting for the possible execution of pmgs firms profits are larger in an equilibrium where pmgs are offered than in an equilibrium without pmgs we also consider the incentives of firms to choose pmgs and show that an equilibrium where all firms offer pmgs does not exist because of a free riding problem

market size and substitutability in imperfect competition a bertrand edgeworth chamberlin model competition is often associated with the idea that there are many traders in the market or that each price maker is small as compared to the market this paper introduces this notion of market size in a model of price competition with imperfect substitutes by constructing a model which creates a bridge between the chamberlin and bertrand edge worth lines of work on price competition we investigate the role of two fundamental parameters in the existence of an equilibrium the market size given by the number n of competitors and the degree of substitutability we prove that a for a given number of n 2 of competitors a sufficiently large but finite degree of substitutability entails nonexistence this thus generalizes the bertrand edgeworth nonexistence result which applies only to perfect substitutes b conversely for a given upper bound on the degree of substitutability a sufficiently large number of competitors ensures existence which thus introduces a significant role for market size in models of imperfect competition we finally investigate the proximity of an equilibrium when it exists to a competitive outcome and we find that both high substitutability and large market size are a condition for competitiveness

sustainability oriented innovation system analyses of brazil russia india china south africa turkey and singapore abstract the coherency of research development and innovation processes are vital in promoting a more resource efficient society sustainability oriented innovation systems define specific kinds of innovation systems i e those that are directed to the aims of sustainable development this paper develops an integrated method with four layers of analysis to evaluate the priorities and performances of such systems the method is applied to a sample of emerging and innovation based economies namely brazil russia india china south africa turkey and singapore the analyses consider the 6 main activities or functional dynamics of innovation systems and a set of 19 keywords the keywords relate to the thematic clusters of renewable energy technologies energy efficiency and environmental management the priorities of the countries in each main interaction of the system are classified accordingly the priorities are compared to the existing level of specialization in the keywords based on the intermediate outputs of the system the analyses cover 153 838 papers and 15 138 patents between the years 2003 and 2014 a sustainable innovation index is developed to aggregate the normalized values of country performance across all keywords singapore receives the highest value 21 17 and the average of brazil russia india china and south africa is 14 91 the results determine the ability of countries to align priorities and performance towards more mature innovation systems for sustainable development

tacit collusion with price matching punishments abstract tacit collusion is explored under a strategy in which loosely speaking firms match the lowest price set by any firm in the previous period conditions are provided under which this strategy supports collusive outcomes in a subgame perfect equilibrium in contrast to traditional results the highest collusive price is always lower than the monopoly price it corresponds to the unique nash equilibrium price when upward and downward price deviations are matched our paper provides a game theoretic interpretation of the old kinked demand curve theory which unlike earlier attempts does not depart from standard timing assumptions to do so

a model of duopoly and meeting or beating competition this paper analyzes the use of meeting and beating competition clauses in duopoly markets a differentiated products price setting model is considered in which firms have the option of precommitting themselves to contracts which bind their own price to be some prespecified function of their competitor s price the analysis establishes conditions under which these contracts facilitate oligopoly coordination under which they result in price discrimination and under which they can actually be procompetitive

the welfare losses from price matching policies several recent papers argue that price matching policies raise equilibrium prices we add to this literature by considering potential welfare losses which have two sources harberger triangles from high prices and posner rectangles from over entry we compare price matching markets with entry to monopoly and price matching markets without entry and find that price matching with entry creates greater welfare losses than monopoly in markets with a low ratio of fixed to marginal cost we illustrate this result using parameters from the us wholesale gasoline and air travel markets and relate our model to price matching among nasdaq market makers

pricing on the internet it is often claimed that e commerce has created a more competitive environment by encouraging the entry of new online firms and by enabling buyers to search easily for the lowest prices the limited evidence that exists paints a mixed picture many online markets are advertising and technology intensive creating a tendency towards growing concentration price search is imperfect and firms can dampen price competition by increasing product heterogeneity and switching costs in many sectors online firms may come to acquire some market power we look at the forms of pricing that are likely to emerge in such markets including the greater use of price discrimination and auction like trading arrangements copyright 2001 oxford university press

a note on probability distributions with increasing generalized failure rates distributions with an increasing generalized failure rate igfr have useful applications in pricing and supply chain contracting problems we provide alternative characterizations of the igfr property that lead to simplify verifying whether the igfr condition holds we also relate the limit of the generalized failure rate and the moments of a distribution

research note price matching guarantees retail competition and product line assortment price matching guarantees pmgs are offers to match a competitor s price on a specific item such guarantees are extremely common in u s retail practice and their impact has been studied in several published papers the existing analytic literature models each retailer as a single product seller most work assumes that each retailer s product is identical with or completely substitutable for the competitor s product in reality competing retailers often sell multiple products and these products do not always overlap or may overlap partially but not totally furthermore retailers that offer pmgs routinely exclude certain offerings from pmg coverage this raises the interesting question of how product variety and product stocking factors affect retailer decisions about offering pmgs in this paper we simultaneously consider three factors of retailing importance that imply results consistent with pmg use and nonuse the ability to choose to stock the same product as or a product differentiated from a competitor s offering the possibility of shelf space limitations on the ability to stock complete variety and the category demand enhancing effect of variety these are sensible and realistic descriptive factors shaping retailers product and pricing decisions and because they have not been considered jointly in the prior literature on pmgs their joint consideration helps to expand our understanding of the drivers of pmg implementation and impact in the presence of these three factors we examine retailers decisions about whether to offer a pmg what product s to stock and how to price the product s stocked our results show that shelf space limitations have an important influence on pmg provision in particular when retailers are shelf space constrained and product substitutability in the category is sufficiently large choosing to use pmgs which by definition also requires stocking identical products is strictly less profitable than enduring bertrand price competition but enjoying retail product differentiation the result that pmgs can be profit reducing relative to head to head retail competition is a novel one driven in our model by the opportunity costs of stocking identical products i e the inability to benefit from the demand enhancing effects of variety and the differential small or large between bertrand pricing and pmg pricing levels we further show that under asymmetric shelf space availability either product variety will be severely limited or retailers will offer a different array of products weak substitution between products leads to the latter with pricing between the differentiated products bertrand and monopoly levels strong substitution leads to the former with pricing at the monopoly level our results also show that with unlimited shelf space both competing retailers offer pmgs stock the entire available product line and enjoy monopoly pricing given our focus on product variety issues we also relate our results to the literature on branded variants our results demonstrate that the nature of product variety the availability of retail shelf space and the category demand enhancing effect of variety are key market characteristics that jointly and strongly affect the optimality of pmgs and the resulting pricing and profitability characteristics of the market

the emergence of third world multinationals indian joint ventures overseas abstract the more industrialized ldcs are emerging increasingly as exporters of capital or of technology in several forms this paper draws on the recent experience of indian mncs to reexamine the factors which give rise to third world multinationals the author summarizes the current state of research in the analysis of ldcs mncs drawing upon specific mnc literature and other related literature on trade and technology he deals with the evidence on indian capital exports placing it in the broader context of technology exports discussing some examples of interest and drawing comparisons with foreign investment by some other ldcs he assesses the indian experience using the distinctions drawn by dunning s eclectic theory but concentrating on the processes of technical change that underline the growth of its mncs the final section draws some tentative conclusions

do low price guarantees guarantee low prices evidence from competition between amazon and big box stores it has long been understood in theory that price match guarantees can be anticompetitive but to date scant empirical evidence is available outside of some narrow markets this paper broadens the scope of empirical analysis studying a wide range of products sold on a national online market using an algorithm that extracts data from charts i obtain a novel source of data from online price trackers i examine prices of goods sold on amazon before and after two big box stores target and best buy announced a guarantee to match amazon s prices employing both difference in difference and regression discontinuity approaches i robustly estimate a positive causal effect of six percentage points the effect was heterogeneous with larger price increases for initially lower priced items my results support anticompetitive theories which predict price increases for amazon a firm that did not adopt the guarantee and are consistent with plausible mechanisms for the heterogeneous impact

energy co2 emissions and value added flows embodied in the international trade of the brics group a comprehensive assessment abstract the brics economies group i e brazil russia india china and south africa has become an important contributor to the growth of the world economy which is increasingly concerned about carbon emissions due to the recent increase in energy use in these countries while the embodied energy use related to emissions of the brics group has been discussed in the literature an integrated analysis of energy carbon footprints and value added flows associated with international trade among the brics group has to date rarely been reported based on an improved multi regional input output model south africa was extracted from the rest of the world in the world input output database wiod to analyze the above mentioned flows embodied in trade within the brics countries as well as between the brics group and other economies the results show that the brics economic entity was a net embodied flows exporter more flows were embodied in intermediate products than in final demand within the brics group compared with other brics economies china which is the largest transit country transferred more embodied flows from russia to other brics countries and drove more embodied flows from major economies including the united states and european countries outside the brics group than those within the brics group however china imported a relatively higher embodied energy and co2 in per unit value added from the brics countries than non brics countries while exporting relative lower embodied energy and co2 per value added to other brics economies than non brics countries the potential policy implications on cleaner development within the brics economies are discussed at the end of this paper

price guarantees in dynamic pricing and revenue management we present a new model for revenue management of product sales that incorporates both dynamic pricing and a price guarantee the guarantee provides customers with compensation if prior to a fixed future date the price of the product drops below a level specified at the time of purchase we consider the problem of simultaneously determining optimal dynamic price and guarantee policies for items from a fixed stock when demand depends both on the price and on the parameters of the price guarantee the model can be used for pricing any items with limited availability over a fixed time horizon we formulate this model as a discrete time optimal control problem prove the existence of its optimal solution explore some of the structural properties of the solution present lower bounding heuristics for solving the problem and report numerical results

household biogas use in rural china a study of opportunities and constraints as a renewable energy biogas is not only an important part of the development of rural new energy but also an important aspect of sustainable development in china the development process and present status of household biogas specifically the opportunities and constraints of household biogas in rural china are discussed in this paper only about 19 of the biogas potential has been utilized in rural china there are several opportunities for household biogas development in rural china including the problem of rural household energy consumption the availability of biogas fermentation materials national financial subsidies legal and international clean development mechanisms also more research needs to be done in straw fermentation and cold fermentation technology training should be conducted to raise the level of biogas customers in comprehensive biogas utilization measures should be taken to improve the follow up services and management of biogas plants the information presented in this paper will be helpful not only to the sustainable development of household biogas in rural china but also to the development of biogas in similar countries around the world

a consumer perspective on price matching refund policies effect on price perceptions and search behavior although price matching refund policies are common in many retail environments the impact of such policies on consumers has largely been ignored this article reports the results of three studies that examine price matching policies from a consumer perspective study 1 shows that consumers perceive price matching policies as signals of low store prices and that the presence of a refund increases the likelihood of discontinuing price search contrary to the predictions based on signaling theory in information economics studies 2 and 3 show that when search costs are low the number of stores searched increases in the presence versus absence of a price matching policy when search costs are high consumers appear to accept the price matching signal at face value and search less in the presence of a refund the article concludes by discussing the theoretical implications of the findings and suggesting directions for future research

research note consumer heterogeneity and competitive price matching guarantees price matching guarantees are widely used in consumer and industrial markets previous studies argue that they are a marketing tactic that facilitates implicit price collusion this is because once a store adopts this marketing tactic its rivals can no longer steal its customers by undercutting its price and hence they have little incentive to initiate price cuts while a store with price matching guarantees has no fear of losing customers to rivals price cuts it has every incentive to raise its own price to charge a higher price to its loyal consumers a growing body of legal literature uses this argument today to justify calls for antitrust actions against stores employing this marketing tactic however this theoretical conclusion baffles practitioners and industry experts in practice sellers typically embrace this marketing tactic in response to heavier competition and a growing bargain consciousness among shoppers the introduction of price matching guarantees by a store is frequently interpreted by industry observers as the initiation of a price war rather than a signal of price collusion this assertion is supported in many instances by the fact that stores that introduce price matching guarantees also roll back their prices and typically suffer subsequent loss of profits most ironically the favorite examples used by researchers to illustrate how price matching guarantees can enforce price collusion crazy eddie and nobody beats the wiz have subsequently either gone bankrupt or filed for federal bankruptcy protection in this study we show that price matching guarantees can indeed facilitate competition the expected prices and profits can be strictly lower when all stores adopt price matching guarantees than when they are not allowed to this is because the adoption of price matching guarantees generates not only a competition dampening effect which has been recognized in the literature but also a competition enhancing effect this latter effect comes from the fact that price matching guarantees encourage price search by those consumers who prefer to shop at a particular store but are mindful of saving opportunities these consumers will have incentives to obtain the rival store s price when their favorite store offers price matching guarantees to avail themselves of the lowest possible price at their favorite store as a result price matching guarantees reduce the number of purchases at the store from those consumers who would have paid the full price and thus prompt a store to price more aggressively to bid for more incremental sales this competition enhancing effect can more than offset the competition dampening effect in markets where consumers differ in their price search costs and store loyalty thus our study casts doubt on the advisability of blanket prohibition on price matching guarantees our argument relies only on consumer segmentation and on the phenomenon of periodic sales both of which are common in retail markets we arrive at our conclusion by incorporating bargain shoppers and opportunistic loyals into the standard sales promotion models in contrast the past literature on price matching guarantees ignores the ubiquitous phenomenon of sales in retail markets and overlooks those consumers who prefer to shop at a particular store but are alert to saving opportunities as a result it is troubled by two awkward conclusions on the one hand price matching guarantees simply remove rivals incentives to undercut in price and hence also their incentives to run sales this implies that the adoption of price matching guarantees in a market will eliminate the phenomenon of sales which is obviously counterfactual on the other hand in equilibrium no consumer actually invokes price matching guarantees as each player has incentives to close any price gap in the market this is obviously false based on our casual observations and our conversations with store managers theoretical research on the subject thus far has been overwhelmingly one sided and empirical or experimental studies are conspicuously lacking we hope that our conclusion will spark further research in both directions a healthy debate will broaden our perspective on an issue of great importance in formulating public policies and in managerial decision making

opportunities and challenges for renewable energy policy in china renewable energy is the inevitable choice for sustainable economic growth for the harmonious coexistence of human and environment as well as for the sustainable development government support is the key and initial power for developing renewable energy in this article an overall review has been conducted on renewable energy development policy including laws and regulations economic encouragement technical research and development industrialized support and government model projects etc in china on this basis a systematic analysis has been conducted on the disadvantages of renewable energy development policy on the point of long term effective system for renewable energy development a series of policy advice has been offered such as strengthening the policy coordination enhancing regional policy innovation echoing with clean development mechanism implementing process management constructing market investment and financing system it is expected that the above advices could be helpful to ever improvement of renewable energy development policy c 2007 elsevier ltd all rights reserved

platform monopolization by narrow ppc bpg combination booking et al abstract the price parity clauses ppcs that online booking platforms impose have come under antitrust scrutiny wang and wright 2017 show how by preventing showrooming a narrow ppc can reduce search costs and benefit consumers under between platform competition in response to having to give up its wide ppc to hotels booking com emphasized its best price guarantee bpg to customers we observe that a narrow ppc combined with a low hassle costs bpg leaves only wang and wright s price parity and monopoly equilibrium ppme in which consumers are worse off than with no platform operating at all a more efficient incumbent platform can deter entry with the bpg while the narrow ppc eliminates competition from direct sales channels an equally efficient platform could enter and compete consumer prices down because of the existence of hassle costs yet this equilibrium is fragile to network effects if sellers have incentives not to price differentiate between platform s and their direct sales channel a narrow ppc alone suffices to sustain the ppme in both cases the detrimental pricing contract combination that we point out calls for different platform competition policy