Loyalty Rebates : An Assessment of Competition Concerns and a Proposed Rule of Reason
Like most pricing practices, loyalty rebates may benefit or harm consumers according to the circumstances. In this essay, I review the pro- competitive and anticompetitive motives for loyalty rebates. Several conclusions emerge. First, every particular type of loyalty rebates can in some circumstances be pro-competitive. There is therefore little basis for a per se prohibition, even restricted to a particular category of suspicious-looking schemes. Second, dominant firms willing to engage into an exclusionary strategy may find that cleverly fine-tuned pricing schemes involving loyalty rebates possess several advantages over simple predatory pricing strategies: they can achieve exclusion at a lower cost, be more credible, and erect a permanent barrier to entry without any need for a recoupment period. Loyalty rebates thus deserve the scrutiny with which they have been gratified lately. I conclude by proposing a structured rule of reason for the antitrust handling of loyalty rebates cases.
|Date of creation:||Oct 2005|
|Contact details of provider:|| Postal: 48 boulevard Jourdan - 75014 PARIS|
Phone: +33(0) 1 43 13 62 30
Fax: +33(0) 1 43 13 62 32
Web page: http://www.cepremap.fr/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cpm:docweb:0514. 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: (Stéphane Adjemian)
If references are entirely missing, you can add them using this form.