Retailers' control of reference price given product category and level of competition

Oded Lowengart, Shlomo Mizrahi

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This paper examines the conditions that make reference price manipulation beneficial to retailers. The paper offers a modelling approach that is based on two distinct dimensions: product category, and degree of market competition. The model shows that reference price manipulation in a competitive market is less beneficial to retailers than it is in a monopolistic market. Reference price manipulation of a specific product is most advantageous to retailers when it is a frequently purchased, low-priced product in a monopolistic market. For an infrequently purchased, high-priced product in a competitive market, reference price manipulation is less beneficial. The analysis gives rise to policy implications that could potentially improve consumer welfare.

Original languageEnglish
Pages (from-to)377-394
Number of pages18
JournalInternational Review of Retail, Distribution and Consumer Research
Volume11
Issue number4
DOIs
StatePublished - 1 Jan 2001

Keywords

  • Consumer Welfare
  • Modelling Reference Price
  • Reference Price Manipulation

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