Many retailers advertise price-matching policies, such as, “In the unl

Many retailers advertise price-matching policies, such as, “In the unlikely event that you find an identical item that you purchased here offered at a lower price in another store, we promise to refund the difference.” Contrary to what might logically be expected, a recent study finds that the presence of such a policy leads to a decrease in consumer searches when search costs are low (e.g., when multiple competitor stores are clustered in a small area), but an increase in consumer searches when search costs are high. These findings can be explained if a store’s price-matching policies __________.

Which of the following most logically completes the passage?


A. affect consumer search behavior only when information about prices in other stores is unavailable

B. encourage consumers to shop around when there are multiple competitor stores nearby

C. force nearby competitor stores to reduce their prices in order to retain a market share

D. are taken as credible indicators of low prices at the store when and only when it is easy for consumers to verify them

E. lead to significant increases in consumer searches only for high-price purchases