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In other cases, Amazon has price-matched competitor sites (such as Barnes and Noble, Smashwords, etc.) in accordance with Amazon contract terms. So, even if a book is listed as 0.99 cents on Amazon, if it's free on another site, Amazon may drop the price to match it.
The price-matching was intended to be for a lower price that a sales channel offered the book, not for the author to reduce their price. Both Amazon KDP and Smashwords' TOS state the price should be the same on all sales channels. Since Amazon KDP has a $.99 cent minimum, no books should be available for free, except in the case of the temporary promotion when your title is in Amazon KDP Select (which would actually go against Smashwords' TOS, if you want to get technical).