Loyalty programs increase monopoly power making the demand curve more inelastic and increasing prices.

Question

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Loyalty programs can increase the level of customer loyalty towards a particular brand or company, which can result in a more inelastic demand curve for that product or service. This increased brand loyalty can give the company increased market power and potentially allow them to raise prices without experiencing a significant decline in demand. Therefore, loyalty programs may contribute to the firm's monopoly power and lead to higher prices for consumers.

Loyalty Programs Increase Monopoly Power Making the Demand Curve More