Buy now and match later: Impact of posterior price matching on profit with strategic consumers

Manufacturing and Service Operations Management

Volumn 12, Issue 1, 2010, Pages 33-55

  Lai, Guoming ^a   Debo, Laurens G ^b   Sycara, Katia ^c  

^a CARNEGIE MELLON UNIVERSITY   (United States)

^b UNIVERSITY OF CHICAGO   (United States)

^c CARNEGIE MELLON UNIVERSITY   (United States)

Author keywords

Discounts; Inventory management; Pricing; Rational expectations equilibrium; Strategic consumers

Indexed keywords

CONSUMER SURPLUS; END MARKETS; FIXED PRICES; INVENTORY DECISIONS; INVENTORY INVESTMENT; INVENTORY MANAGEMENT; PARETO IMPROVEMENTS; PRICE DIFFERENCE; RATIONAL EXPECTATIONS;

ECONOMICS; INVENTORY CONTROL; PROFITABILITY; SALES;

COSTS;

EID: 77249107107     PISSN: 15234614     EISSN: 15265498     Source Type: Journal    
DOI: 10.1287/msom.1080.0248     Document Type: Article

References (29)

1. Arbatskaya, M., M. Hviid, G. Shaffer. 2004. On the incidence and variety of low-price guarantees. J. Law Econom. 47(1) 307-332.
2. Aviv, Y., A. Pazgal. 2008. Optimal pricing of seasonal products in the presence of forward-looking consumers. Manufacturing Service Oper. Management 10(3) 339-359.
3. Besanko, D., W. L. Winston. 1990. Optimal price skimming by a monopolist facing rational consumers. Management Sci. 36(5) 555-567.
4. Bulow, J. I. 1982. Durable-goods monopolists. J. Polit. Econom. 90(2) 314-332.
5. Butz, D. 1990. Durable goods monopoly and best-price provisions. Amer. Econom. Rev. 80(5) 1062-1076.
6. Cachon, G. P., R. Swinney. 2008. Purchasing, pricing and quick response in the presence of strategic consumers. Management Sci. 55(3) 497-511.
7. Chen, Y., C. Narasimhan, Z. J. Zhang. 2001. Research note: Consumer heterogeneity and competitive price matching guarantees. Marketing Sci. 20(3) 300-314.
8. Coase, R. H. 1972. Durability and monopoly. J. Law Econom. 15(1) 143-149.
9. Corts, K. 1996. On the competitive effects of price matching policies. Internat. J. Indust. Organ. 15(3) 283-299.
10. Edlin, A. 1997. Do guaranteed-low-price policies guarantee high prices, and can antitrust rise to the challenge? Harvard Law Rev. 111(2) 528-575. (Pubitemid 128008014)
11. Elmaghraby, W., A. Gülcü, P. Keskinocak. 2008. Designing optimal preannounced markdowns in the presence of rational customers with multiunit demands. Manufacturing Service Oper. Management 10(1) 126-148.
12. Holt, C. A., D. T. Scheffman. 1987. Facilitating practices: The effects of advance notice and best-price policies. RAND J. Econom. 18(2) 187-197.
13. Levin, Y., J. McGill, M. Nediak. 2007. Price guarantees in dynamic pricing and revenue management. Oper. Res. 55(1) 75-97.
14. Liu, Q., G. van Ryzin. 2008. Strategic capacity rationing to induce early purchases. Management Sci. 54(6) 1115-1131.
15. McWilliams, G. 2004. Minding the store: Analyzing consumers, Best Buy decides not all are welcome.Wall Street J. (November 8) A1.
16. Merrick, A. 2001. Priced to move: Retailers attempt to get a leg up on markdowns with new software. Wall Street J. (August 7) A1.
17. Muth, J. F. 1961. Rational expectations and the theory of price movements. Econometrica 29(3) 315-335.
18. O'Donnell, J. 2006. Retailers try to train shoppers to buy now. USA Today (September 26) B3.
19. Png, I. P. 1991. Most-favored-customer protection vs. price discrimination over time. J. Pol. Econom. 99(5) 1011-1028.
20. Png, I. P., D. Hirshleifer. 1987. Price discrimination through offers to match price. J. Bus. 60(3) 365-383.
21. Salop, S. 1986. Practices that (credibly) facilitate oligopoly coordination. J. Stiglitz, F. Mathewson, eds. New Developments in the Analysis of Market Structure. MIT Press, Cambridge, MA, 265-290.
22. Sargent, M. 1993. Economics upside-down: Low price guarantees as mechanisms for facilitating tacit collusion. University Pennsylvania Law Rev. 141 2055-2118.
23. Simons, J. 1989. Fixing price with your victim: Efficiency and collusion with competitor-based formula pricing clauses. Hofstra Law Rev. 17 599-640.
24. Stokey, N. L. 1981. Rational expectations and durable goods pricing. Bell J. Econom. 12(1) 112-128.
25. Su, X. 2007. Inter-temporal pricing with strategic consumer behavior. Management Sci. 53(5) 726-741.
26. Su, X. 2008. Inter-temporal pricing and consumer stockpiling. Working paper, University of California, Berkeley.
27. Su, X., F. Zhang. 2008. Strategic consumer behavior, commitment, and supply chain performance. Management Sci. 54(10) 1759-1773.
28. Xu, Z. 2008. Optimal best-price policy. Working paper, Northwestern University, Evanston, IL.
29. Yin, R., Y. Aviv, A. Pazgal, C. S. Tang. 2008. Optimal markdown pricing: Implications of inventory display formats in the presence of strategic customers. Working paper, Arizona State University, Tempe.