Price-matching strategies may fail to enhance profits when:
A) firms cannot prevent customers from making deceptive claims.
B) firms have different marginal costs.
C) firms cannot prevent customers from making deceptive claims or firms have different marginal costs.
D) None of the statements are correct.

Question

Quizplus · Accepted Answer

If firms cannot prevent customers from making deceptive claims, they may end up matching a competitor's price that is not actually lower, leading to lower profits. Similarly, if firms have different marginal costs, one firm may end up losing money by matching a lower price. Therefore, both these factors can lead to price-matching strategies failing to enhance profits.

Price-Matching Strategies May Fail to Enhance Profits When