Nothing so Certain as your Anchors? A Consumer Bias that may Lower Prices and Prevent Cartels

Autor: András Kálecz-Simon, Barna Bakó
Rok vydání: 2016
Předmět:
Zdroj: Journal of Industry, Competition and Trade. 17:273-282
ISSN: 1573-7012
1566-1679
DOI: 10.1007/s10842-016-0238-8
Popis: In this paper, we investigate the effect of reference prices on oligopolistic firms’ behavior. Specifically, we analyze pricing strategies and equilibrium outcomes when differentiated firms compete in Bertrand fashion and reference prices act as anchors. We show that anchoring may lower the prices charged in the long run. Furthermore, we claim that the existence of anchoring makes collusion less stable. This might have implications on the optimal allocation of regulatory resources.
Databáze: OpenAIRE