1. Airlines and hotels have many frequent-flier and frequentvisitor programs in which individuals who fly the airline or stay at the hotel receive bonuses that are the equivalent of discounts.

a. Give two reasons why these companies have such programs rather than simply offering lower prices.

b. Can you give other examples of such programs?

c. What is a likely reason why firms don’t monitor these programs?

d. Should the benefits of these programs be taxable?