Membership Has Its Punishments

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Executive Summary

If you think that frequent flier programs and other tactics that reward customers for their loyalty to a particular company ensure good deals for consumers, think again. Consumers may not benefit from programs that reward customer loyalty as much as they would if good old-fashioned competition determined prices. Tacit collusion arrangements are not illegal price-fixing or gouging schemes, as the dictionary definition of the term collusion would imply. Rather, tacit collusion results from conditions that influence companies to behave in certain ways.

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