Sharif Digital Repository

This research is about raffles held by firms. Nowadays raffles are used by some firms as a mean to attract more customers and obtain more profit to the extent that they compete on their prize instead of their price. In order to investigate this phenomenon, we introduce a model based on spatial competition. This model explains the reason firms have incentive to offer raffles when consumer is risk neutral. According to this model we conclude competing on prize reduces consumers’ surplus considerably. Because of this, the intervention of policy maker can prevent the reduction in consumers’ surplus