BestDeal.com (henceforth, BD) and CrazySavings.com (henceforth, CS) are two online retailers with free return policies. They sell the same brand of TV. The retailers' cost per TV is $1000.

There are 100 buyers in the market. Each buyer has a perfectly inelastic demand for exactly one TV. Initially, each buyer pays for a TV from either website with equal probability. If the buyer finds out that the other website offers a strictly lower price, he/she will simply return the TV to the original website free of charge, and then buy a new one from the other website at the cheaper price.

1. Is there an equilibrium in which BD charges $1500 for each TV?

A. YES

B. NO

2. Now suppose that the two websites both announced their "lowest price guaranteed" policy. Here is the statement of the policy:

"We offer the best price, guaranteed! If you pay for a TV on our site and later find a lower price from our competitor, just let us know and we'll refund you the difference!"

Is there an equilibrium in which BD charges $1500 for each TV?

A. YES

B. NO

3. Who can benefit from the "lowest price guaranteed" policy?

A. The buyers

B. The retailers

C. Both the buyers and the retailers

D. Neither the buyers nor the retailers