TITLE:
Price and Service Quality Competition with Benchmark Effect
AUTHORS:
Wangyan Xie
KEYWORDS:
Benchmark Effect, Prominent Firm, Loss Aversion
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.4 No.2,
February
25,
2016
ABSTRACT: We address the effect of the effect of benchmark effect of industry prominent firm for the influence of the duopoly competition. Consumers always consider prominent firms as the industry benchmark, when they evaluate other firms’ product, treating prominent firm as a reference point, thus show the loss aversion behavior. We find that benchmarking effect of the prominent firm makes consumer surplus increase, while decreases both firms’ profits.