Advanced Search
MyIDEAS: Login

Reward Programs and Entry Deterrence

Contents:

Author Info

  • Lester M.K. Kwong

    ()
    (Department of Economics, Brock University)

Abstract

This paper seeks to endogenize consumer switching costs by considering simple reward programs in the form of a price discount on future purchases for current consumers to a firm. In a two period model with a more cost efficient potential entrant, we show that for sufficiently low entry costs, the introduction of a reward program by an incumbent is never optimal. For intermediate values of the entry cost, there exists a bounded interval of rewards under which entry can be successfully deterred. Nevertheless, the desirability for the incumbent to preclude entry is solely contingent on the relative cost efficiency of the entrant.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://coffee.econ.brocku.ca/RePec/pdf/0501.pdf
Our checks indicate that this address may not be valid because: 404 File not found. If this is indeed the case, please notify (Jean-Francois Lamarche)
File Function: Revised version, 2005
Download Restriction: no

Bibliographic Info

Paper provided by Brock University, Department of Economics in its series Working Papers with number 0501.

as in new window
Length: 17 pages
Date of creation: Aug 2004
Date of revision: Jun 2005
Handle: RePEc:brk:wpaper:0501

Contact details of provider:
Postal: 500 Glenridge Avenue, St. Catharines, Ontario, L2S 3A1
Phone: (905) 688-5550 3325
Fax: (905) 988-9388
Email:
Web page: http://www.brocku.ca/economics/
More information through EDIRC

Related research

Keywords: Reward and Loyalty programs; Barrier to Entry; Entry deterrence; Switching Costs;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:brk:wpaper:0501. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Francois Lamarche).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.