Price Discrimination with Loss Averse and Horizontally Differentiated Consumers

Jong-Hee Hahn, Jinwoo Kim, Sang-Hyun Kim and Jihong Lee
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Jinwoo Kim: Seoul National University
Jihong Lee: Seoul National University

Korean Economic Review, 2018, vol. 34, 117-129

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.

Keywords: Price Discrimination; Hotelling Preferences; Reference-dependent Preferences; Loss aversion; Personal Equilibrium; Preferred Personal Equilibrium (search for similar items in EconPapers)
JEL-codes: D03 D42 D82 D86 L11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (11)

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