Price matching in online retail.

We analyze a sample of consumer‐electronics products sold by the US NewEgg online‐retailer to study the impact of price‐matching guarantees (PMGs) on prices. By applying a difference‐in‐differences approach, we find that the price of the policy‐adopting retailer increases by 4.7% during the policy validity period and up to 5 days after the treatment, while those of the non‐adopting competitor are not affected. Results are mainly driven by highly‐rated, visible, and expensive products, whereas the policy does not affect low‐rated, less visible, and cheaper products. These findings are consistent with the hypotheses that PMGs act as price discrimination or signaling tools. [ABSTRACT FROM AUTHOR]