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.
|Number of pages||13|
|Journal||Korean Economic Review|
|Publication status||Published - 2018 Jun 1|
Bibliographical noteFunding 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).
© 2018, Korean Economic Association. All rights reserved.
All Science Journal Classification (ASJC) codes
- Economics, Econometrics and Finance(all)