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Customer Loyalty Programmes and Consumers

Author

Listed:
  • Matti Kari
  • Ilkka Kiema

  • Petri Kuoppamäki
  • Eero Lehto

Abstract

The Labour Institute for Economic Research report “Customer Loyalty Programmes and Consumers” examines a wide range of customer loyalty schemes, mainly in the retail and financial sectors in Finland, but also in Sweden. The study also reviews how the economics literature has assessed the economic effects of tying and bundling different products. In addition, it analyses how EU competition law evaluates such practices. The report presents a theoretical model that can be used to assess the effects of bundling on financial service prices and consumer surplus. This analysis provides a fresh perspective on what bundling of insurance and banking services involves, and what aspects of it may be concerning from the standpoint of consumers and competition. The report recommends that the scope of cross-industry customer loyalty schemes, as well as the length of benefit accumulation periods, should be restricted in order to increase competition and reduce prices.

Suggested Citation

Handle: RePEc:pst:report:36
as

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File URL: https://labore.fi/wp-content/uploads/2017/10/Raportteja-36.pdf
File Function: First version, 2017
Download Restriction: no
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