Price discrimination with loss averse and horizontally differentiated consumers

Jong Hee Hahn; Jinwoo Kim; Sang Hyun Kim; Jihong Lee

Price discrimination with loss averse and horizontally differentiated consumers

Jong Hee Hahn, Jinwoo Kim, Sang Hyun Kim, Jihong Lee

Department of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This paper considers a monopolist seller facing horizontally differentiated consumers, whose preferences are reference-dependent and loss averse in the frame of Kőszegi and Rabin (2006). Our results on optimal menu suggest that consumer loss aversion does not necessarily limit the benefits of screening under the horizontal demand structure, in contrast to the findings of Hahn, Kim, Kim and Lee (2018) and Herweg and Mierendorff (2013) who consider the case of vertically differentiated preferences.

Original language	English
Pages (from-to)	117-129
Number of pages	13
Journal	Korean Economic Review
Volume	34
Issue number	2
Publication status	Published - 2018 Jun 1

Bibliographical note

Funding Information:
This research was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2014S1A5A2A03065638). Jihong Lee acknowledges financial support from Seoul National University Asia Center (#SNUAC-2017-008).

Publisher Copyright:
© 2018, Korean Economic Association. All rights reserved.

All Science Journal Classification (ASJC) codes

Economics, Econometrics and Finance(all)

Cite this

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title = "Price discrimination with loss averse and horizontally differentiated consumers",

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N2 - This paper considers a monopolist seller facing horizontally differentiated consumers, whose preferences are reference-dependent and loss averse in the frame of Kőszegi and Rabin (2006). Our results on optimal menu suggest that consumer loss aversion does not necessarily limit the benefits of screening under the horizontal demand structure, in contrast to the findings of Hahn, Kim, Kim and Lee (2018) and Herweg and Mierendorff (2013) who consider the case of vertically differentiated preferences.

AB - This paper considers a monopolist seller facing horizontally differentiated consumers, whose preferences are reference-dependent and loss averse in the frame of Kőszegi and Rabin (2006). Our results on optimal menu suggest that consumer loss aversion does not necessarily limit the benefits of screening under the horizontal demand structure, in contrast to the findings of Hahn, Kim, Kim and Lee (2018) and Herweg and Mierendorff (2013) who consider the case of vertically differentiated preferences.

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Price discrimination with loss averse and horizontally differentiated consumers

Abstract

Bibliographical note

All Science Journal Classification (ASJC) codes

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