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Bundling, discounts across product lines and volume discounts in competitive markets: a prisoners' dilemma?

Abstract:

This paper analyses how competition over rebates for customer loyalty across product lines affects firms' pricing and consumers generally. If buyers incur firm specific costs or have shop specific tastes then competitive loyalty discounts lower consumer surplus overall and raise profits - the same is true of competitive volume discounts. Competition without these discounts causes all prices to be kept low as larger customers are targetted; with discounts the prices for heavy users drop, but m...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2004-10-01
Paper number:
208
Keywords:
Pubs id:
1144225
Local pid:
pubs:1144225
Deposit date:
2020-12-15

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