"How to make money when customers expect your products for free? For most of the last century, companies strived to control costs and shift as many units as possible. But now the price of many digital products has dropped to zero, requiring a new kind of business model. The Curve is about...

This article examines the impact of customer reward programs on the competitive outcome in duopolistic markets. We argue that loyalty discounts for repeat customers constitute a commitment device beneficial to suppliers rather than customers. Analyzing a two-period Bertrand model we show that...