Price versus quantity in a duopoly of vertical differentiation with loss-averse consumers

Francisco Martínez-Sánchez

Research in Economics, 2021, vol. 75, issue 1, 1-6

Abstract: In a model à la Mussa and Rosen (1978) in which consumers are loss-averse, I check the robustness of the result obtained by Tanaka (2001). As he did, I find that the quantity contract is a dominant strategy for both firms. Thus, Cournot is the outcome in equilibrium. Finally, I find that loss aversion in general intensifies competition.

Keywords: Loss aversion; Price and quantity contracts; Vertical product differentiation (search for similar items in EconPapers)
JEL-codes: D43 D90 L13 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:75:y:2021:i:1:p:1-6

DOI: 10.1016/j.rie.2020.10.008

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