Article ID: | iaor20132426 |
Volume: | 59 |
Issue: | 4 |
Start Page Number: | 971 |
End Page Number: | 986 |
Publication Date: | Apr 2013 |
Journal: | Management Science |
Authors: | Boyaci Tamer, Ray Saibal, Nalca Arcan |
Keywords: | marketing |
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