2022
DOI: 10.1111/iere.12616
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Excessive Competition on Headline Prices

Abstract: In a variety of purchasing situations, consumers may focus primarily on headline prices, ignoring the full costs associated with acquiring and maintaining a product or service contract. Even when this is the case, it is widely believed that intense competition would adequately protect consumers (the so-called "waterbed effect"). However, in a tractable model of imperfect competition and vertical differentiation, we show that when consumers exhibit context-dependent preferences, competition may rather exacerbat… Show more

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Cited by 2 publications
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References 47 publications
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