| Abstract: | This paper uses the example of trading stamps to examine a model of competitive nonprice marketing strategies. A concept borrowed from ethology, polymorphic equilibrium, is developed and used to explain salient features of trading stamp use by retail firms. The results contribute to an understanding of why virtually identical firms may optimally choose quite different competitive strategies. The paper also demonstrates the possibility of cyclical movements in the proportion of firms that adopt nonprice strategies such as the use of trading stamps. |
