Thursday, January 16, 2003

I'm a Master Rebater
After purchasing my Sidekick and external hard drive, I've mailed in no fewer than three (3) rebate forms for a total of $200. I've not sent in a rebate for a long time, and doing so -- following the arcane instructions and documentation requirements to the letter -- made me think about the economics of the rebate.

What are rebates, exactly? Why not just offer lower prices? Are rebates a gambit in which the product manufacture or retail business assumes that their costs will be lower overall because not everyone will redeem the rebate? Poking around on the Web, I found some interesting information.

  • Scott Gilpatrick at the University of Texas at Austin has written a paper entitled "Present-Biased Preferences and Rebate Redemption" that, yes, most people will be more likely to buy something if a rebate is offered -- but not very likely to redeem said rebate.
  • On the DealChecker site, Henry Norr explains the how and why of rebates, revealing that manufactures pay rebates, not retailers or distributors (although one of my rebates was from and that redemption averages 10-30%.
  • TechTV's Martin Sargent decries rebates as "massive marketing ploys." He then goes on an online shopping spree to find out whether rebates really lower costs in the end.
  • And three academics expand on their non-price-discrimination theory of rebates, attempting to address the "redemption gap."

    Now you know as much about rebate coupons as I do. You lucky devils.

    Soundtrack: Articles of Faith, "Complete Vol. 1 1981-1983"
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