Under the model’s propositions, firms with a higher SLR
will have lower average prices (H1a) and a higher standard
deviation in prices (H1b) in relation to price deviation from the reservation (regular) price. The frequency of price discounts
is related to the likelihood that a retailer will price
below the maximum retail price. Under P1, Firms 2 and 3
will discount more frequently than Firm 1, and under P2, a
firm with a higher SLR will promote more frequently than a
firm with a lower SLR. Overall, a firm with a higher SLR
will discount at least as often as a firm with a lower SLR
and therefore will discount more frequently (H1c) and have
a higher maximum discount frequency (H1d), on average.