<p>A relevant literature is that on <strong>the economics of switching costs</strong>. There are many papers in this literature and a number of surveys, but I would recommend <a href="http://www.nuffield.ox.ac.uk/users/klemperer/competition.pdf" rel="nofollow">this paper</a> by Klemperer for a concise combination of survey and theory. A more comprehensive survey can be found in <a href="http://www.nuff.ox.ac.uk/users/klemperer/Farrell_klempererWP.pdf" rel="nofollow">this handbook chapter</a> by Farrell and Klemperer.</p>

<p>The basic idea is that loyalty programmes (among other things) create a cost for consumers who contemplate switching to another supplier. This literature studies how such costs influence strategic behaviour and competition between firms.</p>

CC BY-SA 3.0
2015-06-25T10:45:11.920Z
2015-06-25T10:45:11.920Z
Ubiquitous
<p>Is there a good survey that covers the theory and empirics of loyalty programs? I am thinking of programs like Amazon Prime, Starbucks, and airlines miles/points. What are the mechanisms? Are they effective in a causal sense?</p>

<reference-request>
A survey on the economics of loyalty programs
dimitriy
# A survey on the economics of loyalty programs

(Asked by: username_0 on 2015-06-24)

Is there a good survey that covers the theory and empirics of loyalty programs? I am thinking of programs like Amazon Prime, Starbucks, and airlines miles/points. What are the mechanisms? Are they effective in a causal sense?

**Tags:** reference-request


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## 1 answers

### Answer by username_1 on 2015-06-25. Score: 1

A relevant literature is that on **the economics of switching costs**. There are many papers in this literature and a number of surveys, but I would recommend [this paper](http://www.nuffield.ox.ac.uk/users/klemperer/competition.pdf) by Klemperer for a concise combination of survey and theory. A more comprehensive survey can be found in [this handbook chapter](http://www.nuff.ox.ac.uk/users/klemperer/Farrell_klempererWP.pdf) by Farrell and Klemperer.

The basic idea is that loyalty programmes (among other things) create a cost for consumers who contemplate switching to another supplier. This literature studies how such costs influence strategic behaviour and competition between firms.


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