A MODEL FOR OPTIMIZING THE REFUND VALUE IN REBATE PROMOTIONS

We derive a simple model for finding the optimal refund to be offered to final consumers by manufacturing firms during rebate promotions. Th e key features of our work are the explicit representations of the red emption function, purchase acceleration, and rebuys by brand-switchers . Depending upon a firm's objectives and given some generally accepted assumptions about the firm's demand function, an optimal refund rate exists that should be different than the short-term rebate rate.