Question: Firms are better off using rebates rather than just lowering the price of a good because people view the firm in a positive light because

Firms are better off using rebates rather than just lowering the price of a good because

people view the firm in a positive light because now poorer people will be able to afford their good.

customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price.

only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price

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