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

Bakó, Barna and Kálecz-Simon, András (2017) Nothing so Certain as your Anchors? A Consumer Bias that may Lower Prices and Prevent Cartels. Journal of Industry, Competition and Trade, 17. pp. 273-282. ISSN 1566-1679

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Official URL: https://doi.org/10.1007/s10842-016-0238-8

Abstract

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.

Item Type:	Article
Subjects:	H Social Sciences / társadalomtudományok > HB Economic Theory / közgazdaságtudomány > HB2 Microeconomics / mikroökonómia H Social Sciences / társadalomtudományok > HB Economic Theory / közgazdaságtudomány > HB5 Mathematical economics / matematikai közgazdaságtan
Depositing User:	Barna Bakó
Date Deposited:	23 Sep 2019 08:42
Last Modified:	23 Sep 2019 08:42
URI:	http://real.mtak.hu/id/eprint/100229

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