Price–matching Guarantees in the Age of Algorithms: A Model of Collusion, Discrimination and the Welfare Trade-off

Price–matching Guarantees in the Age of Algorithms: A Model of Collusion, Discrimination and the Welfare Trade-off | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Price–matching Guarantees in the Age of Algorithms: A Model of Collusion, Discrimination and the Welfare Trade-off Simone Robbiano This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7941350/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract The paper revisits Price Matching Guarantees (PMGs) in the context of online oligopolies that monitor rivals’ prices through real-time algorithms and infer consumer elasticities from User-Generated Contents (UGCs). Building on a dynamic repeated-game framework with homogeneous versus heterogeneous marginal costs, it is shown that PMGs sustain tacit collusion when costs are identical but generate algorithmic price discrimination when costs differ. Monte Carlo simulations confirm the analytical results and quantify the welfare effects under alternative regulatory regimes. While automatic refund mandates eliminate discriminatory rents without suppressing competitive pricing, blunt PMGs bans sacrifice legitimate insurance benefits for elastic consumers. The findings highlight the need for process-based rather than structural antitrust remedies in data-rich digital markets. JEL Codes : D43; H89; K21; L13; L81. Microeconomics Price–Matching Guarantees Online Pricing Oligopoly Models Algorithmic Collusion Price Discrimination Welfare Antitrust Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. 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