E.CA economic research on loyalty price discrimination
Review of academic literature on the economic theory of the loyalty penalty.
The Competition and Markets Authority (CMA) has published a research report commissioned from a team at the economics consultancy E.CA Economics led by Professors Paul Heidhues and Johannes Johnen.
The report reviews the academic literature on the economic theory of the loyalty penalty and sets out the lessons it has to offer. This includes both the classical theory such as switching and search costs, and behavioural theories such as consumer inertia and complex contracts.