Retailer Choice and Loyalty Schemes - Evidence from Sweden
From economic theory, it is known that consumer loyalty schemes can have lock-in effects resulting in entry barriers and higher prices. This paper concerns consumer loyalty schemes where the main issue is to test the hypothesis that loyalty scheme membership affects the choice of food retailer. This choice is modeled as a random utility maximization problem estimated with maximum likelihood. Based on a data set covering 1,551 Swedish households, we find evidence supporting this hypothesis. Further, according to the results, store characteristics and geographical distance matter for the choice of retailer while household characteristics are not found to have a significant effect.
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|Date of creation:||03 Feb 2010|
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- Fredrik Carlsson & �sa Lofgren, 2006.
"Airline choice, switching costs and frequent flyer programmes,"
Taylor & Francis Journals, vol. 38(13), pages 1469-1475.
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- Beggs, Alan & Klemperer, Paul, 1990.
"Multi-Period Competition with Switching Costs,"
CEPR Discussion Papers
436, C.E.P.R. Discussion Papers.
- Joshua S. Gans & Stephen P. King, 2006. "PAYING FOR LOYALTY: PRODUCT BUNDLING IN OLIGOPOLY -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 54(1), pages 43-62, 03.
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