Sand-Zantman, Wilfried (2014) Analyse économique des pratiques de fidélisation. Revue Française d'Economie, XXVIII (3). pp. 37-70.

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Abstract

The rise of new information technologies and the opening to competition of previously
monopolized sectors have induced more dynamic pricing practices, in particular the development
of loyalty rewards. We aim at looking at the economic motivations and impacts of this new trend,
in particular with regards to effective competition and consumer welfare. First, we explain that, in
a monopolistic setting, loyalty rewards can induce more consumption and benefit both firms and
consumers. Then, in a duopolistic setting, we show that behavior-based price discrimination
increases effective competition and benefits consumers. At last, we discuss the pro- or anti-
competitive impacts of related practices, such as long-term contracting and retention offers.