Extensions for “Customer Poaching and Coupon Trading”

In our model, we have assumed that all consumers are coupon users. As we show here, our results do not change qualitatively if we introduce coupon non-users. Assume that there is a fraction, 1 − γ, of consumers who do not use coupons. They are uniformly distributed on the interval [−L,L] as well, but they can have different price sensitivity than the coupon users have. Specifically, we assume that a coupon non-user located at l is indifferent between buying from either firm if and only if l = p2−p1 β . The remaining fraction γ of consumers are the same as in our benchmark model. We consider two cases: with or without mass media coupons, and find that our comparative statics results remain qualitatively the same as in the main model.