IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Inducing Downstream Selling Effort with Market Share Discounts

  • David Mills

Loyalty discounts and rebates are pricing schemes that offer incentives to buyers for reaching or exceeding certain sales thresholds. In the case of market share discounts, thresholds are expressed as a percentage of the buyer's total purchase requirements. Although market share discounts may have exclusionary effects under certain circumstances when a seller has significant market power, there are plausible non-exclusionary reasons for offering them as well. Two such reasons - rent extraction and inducing downstream selling effort - are explored in this paper. The paper considers the case of a manufacturer who sells a differentiated good through a network of heterogeneous, non-exclusive retailers. The manufacturer offers market share discounts to induce non-contractible selling effort such as brand-specific information or customer service from those retailers who possess certain unobservable characteristics. In some instances, market share discounts induce increased selling effort and improve market performance as compared to linear pricing. In other instances, they have no effect on aggregate benefits, but merely shift the rents created by induced selling effort upstream to the manufacturer. In no instance, as long as the producers of substitute goods retain sufficient sales to remain viable, do market share discounts impair market performance.

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: http://www.tandfonline.com/10.1080/13571516.2010.483082
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 17 (2010)
Issue (Month): 2 ()
Pages: 129-146

as
in new window

Handle: RePEc:taf:ijecbs:v:17:y:2010:i:2:p:129-146
Contact details of provider: Web page: http://www.tandfonline.com/CIJB20

Order Information: Web: http://www.tandfonline.com/pricing/journal/CIJB20

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

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

When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:17:y:2010:i:2:p:129-146. 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: (Michael McNulty)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.