Tuesday, May 29, 2018

Self-Control in the Retailing Industry: Inducing Rejection of Loyalty Schemes

Foschi, Matteo (European University Institute) explores Self-Control in the Retailing Industry: Inducing Rejection of Loyalty Schemes.

ABSTRACT: When consumers register with loyalty schemes, or open a `customer account', offered by large retailers, they allow retailers to study their purchasing behaviour over time. Via personalised offers and discounts, retailers can then use this information to price discriminate. I study the effect on consumer welfare of this discrimination, assuming several different levels of informativeness within the schemes. When schemes are uninformative about consumer preferences they are certain to hurt consumer surplus. When they are fully or partially informative, an increase in aggregate consumer surplus can take place under some conditions. Pareto Improvements are never possible. The model studies groceries and online industries where temptation and self-control are an issue.

https://lawprofessors.typepad.com/antitrustprof_blog/2018/05/self-control-in-the-retailing-industry-inducing-rejection-of-loyalty-schemes.html

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