Master of Science
Dearden, James A.
I examine the relationship between brick-and-mortar retailers offering price-matching guarantees and the atmosphere of their stores. In an extension of the Hotelling model, if a retailer improves the atmosphere of its store, then it raises its price. However, with a price-match guarantee and a competitor with a lower-quality store and a lower price, some of the retailer’s consumers may demand a price match. I identify the circumstances under which a price-match guarantee prevents a retailer from earning increased revenues that may result from improving its in-store atmosphere. In my model, the results depend on the share of consumers who seek price matches and the share of consumers who are loyal to the retailer.
LIN, GAOJIE, "Price Matching Policies and Consumer Loyalty" (2018). Theses and Dissertations. 4302.