Air Miles

The Liquor Control Board of Ontario (LCBO), Ontario’s near monopolistic retailer of alcoholic beverages and one of the world’s largest single purchasers of alcohol, awards customers with AIR MILES for purchases. AIR MILES, like Aeroplan and other award schemes, are largely meant to incentivize consumption. A while ago I asked the LCBO why, as a monopoly, would they offer AIR MILES to consumers? If consumer basically don’t have any other option than to purchase from the LCBO, it’s unlikely that offering AIR MILES incentivizes consumption. That is, in a monopolistic situation, it doesn’t make much sense to offer bonuses when the consumer doesn’t have any other option.