## Is there an Exclusionary Effect of Retroactive Price Reduction Schemes?

2013
##### Series
Working Paper Series / Department of Economics; 2013-21
##### Publication type
Working Paper/Technical Report
##### Abstract
This paper presents an experiment on the loyalty enhancing effect potentially created by retroactive price reduction schemes. Such price reductions are applied to all units bought in a certain time frame if the total quantity passes a given threshold. Close to the threshold, the marginal price the buyer pays for the missing units up to the threshold is very low. A dominant firm can use this effect to exclude potential rivals from competition, which is why some jurisdictions consider retroactive discounts as unlawful. This study shows that there in fact is a loyalty enhancing effect of retroactive discounts and how it relates to risk preferences and loss aversion.
330 Economics
##### Keywords
rebates and discounts, consumer behavior, risk aversion, loss aversion, experiment
##### Cite This
ISO 690BRUTTEL, Lisa, 2013. Is there an Exclusionary Effect of Retroactive Price Reduction Schemes?
BibTex
@techreport{Bruttel2013there-29739,
year={2013},
series={Working Paper Series / Department of Economics},
title={Is there an Exclusionary Effect of Retroactive Price Reduction Schemes?},
number={2013-21},
author={Bruttel, Lisa}
}

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Yes