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Strategic loyalty reward in dynamic price Discrimination

Abstract : This paper proposes a dynamic model of duopolistic competition under behaviorbased price discrimination with the following property: in equilibrium, a firm may reward its previous customers although long term contracts are not enforceable. A firm can offer a lower price to its previous customers than to its new customers as a strategic means to hamper its rival to gather precise information on the young generation of customers for subsequent profitable behavior-based pricing. The result holds both with myopic and forward-looking, impatient enough consumers.
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https://halshs.archives-ouvertes.fr/halshs-00622291
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Submitted on : Monday, September 12, 2011 - 1:45:03 PM
Last modification on : Tuesday, January 19, 2021 - 11:08:50 AM
Long-term archiving on: : Sunday, December 4, 2016 - 4:06:57 PM

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Bernard Caillaud, Romain de Nijs. Strategic loyalty reward in dynamic price Discrimination. 2011. ⟨halshs-00622291⟩

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