Umeå Economic Studies, Department of Economics, Umeå University
No 801:
Retailer Choice and Loyalty Schemes - Evidence from Sweden
Johan Lundberg ()
and Sofia Lundberg ()
Abstract: From economic theory, it is known that consumer loyalty
schemes can have lock-in effects resulting in entry barriers and higher
prices. This paper concerns consumer loyalty schemes where the main issue
is to test the hypothesis that loyalty scheme membership affects the choice
of food retailer. This choice is modeled as a random utility maximization
problem estimated with maximum likelihood. Based on a data set covering
1,551 Swedish households, we find evidence supporting this hypothesis.
Further, according to the results, store characteristics and geographical
distance matter for the choice of retailer while household characteristics
are not found to have a significant effect.
Keywords: Bonus card; Conditional logit; Consumer choice; Distance; Food retailer; Loyalty scheme; (follow links to similar papers)
JEL-Codes: D12; L49; L66; L81; R10; (follow links to similar papers)
34 pages, February 9, 2010
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