There are two supermarkets Supermarket A and Supermarket B a

There are two supermarkets. Supermarket A and Supermarket B are exactly the same prices on online. However, the prices of the two supermarkets in the stores are not the same as those on the Internet. Why the supermarket can not unify the price? In addition, why the supermarket does not use the price as the main competition? Use the economics of economics to explain this phenomenon.

Solution

The supermarket will not unify the price on stores because they can extract consumer surplus by quoting a higher price for the product but in online stores, they have to unify the price because consumers can easily compare the products and their price online.
The supermarket does not use the price competition because if they will do then due to price war price of the products converges to their marginal costs and thereby each and every firm earns a normal profit that\'s why there is not a price based competition.