Other models describing the effects of coupons. For several reasons,the static monopoly
price discrimination paradigm is unlikely to describe couponing for breakfast cereal. As we discuss
below,cereal manufacturers are not monopolists,they may have dynamic considerations, they do
not set the shelf price to retail consumers,and the employees who set cereal manufacturers' coupon
policies may not fully internalize shareholders' profit-maximiziing incentives. The following
paragraphs describe how each of these effects may influence the relationship between coupons
and shelf prices, and they outline how we plan to assess the empirical validity of each explanation.
The predictions and empirical approaches are summarized in Table 1.