Price Discrimination Through Offers to Match Price
Ivan P. L. Png and David Hirshleifer
Journal of Business, July 1987
In this paper, a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the price of any other shop. If the list price elsewhere is lower, the firm will be successful in discrimination. The list price of each firm is increasing in the number of sellers and the total sales are decreasing in the number of sellers. Furthermore, if sellers coordinate, they discriminate more efficaciously and increase their profits by increasing their total sales.