Abstract Against the background of the recent price-tag-gate event in foreign retail business, this article makes a deep theoretic analysis on the inevitability of price fraud, resulting from adverse selection under the conditions of asymmetric information, of foreign retailers in retail markets. Then a game of incomplete information, in which government, retailers and consumers interact with each other, is designed to analyze how the price fraud of foreign retailers occurs. Results show that it is impossible for retailers in a competitive market to conduct serious price fraud to consumers; secondly, strict government market supervision can indeed completely eradicate fraud of retailers; finally, according to the price fraud decision-making conditions of retailers, the government can build all-round price supervision system and carry out the targeted prevention countermeasure for price fraud.
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Received: 08 June 2011
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Corresponding Authors:
LI Zhi
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