Essay: The Effect of Rebates on the Market Signals
The rebates have a negative effect on the market signals that enable the companies to respond to the market circumstances. The artificial supports through debates can result to increased sales hence the manufacturers can postpone advancing the product or cutting the costs that are essential to enable the firm to compete with other inefficient producers effectively.
More so, the rebates change periodically, increasing and decreasing hence this may end up being a source of confusion among the consumers. Through this, the consumers may not understand the superior and inferior products. Further, the confusion may make the consumer to ignore the quality products and only purchase them when the rebates are increased or re-introduced. This has a negative net value to the society and the manufacturers. The long-term effect of the rebates is that a product takes an extended period before winning loyal clients than if the rebates were ignored and never introduced (Foxon, Köhler & Oughton 210).