Modern Approaches to Quantitative Assessment of Habit Formation Based on Consumer Demand Research. On the Example of Alejandro Tatsuo Moreno Okuno (2010) Price competition in mixed strategies in markets with habit formation

Abstract

This article examines the impact of consumer habit formation on the competition of differentiated product firms based on the analysis of the article "Price competition in mixed strategies in markets with habit formation". The work consists of six parts, including consideration of related methodological approaches, the author’s position, the results of the study, as well as ways to expand the author’s model. The distribution of habits for the use of certain products is studied, as well as the characteristics of these habits are studied, taking into account the influence of the psychological aspect on the behavior of an economic agent. This paper considers the "rational maximizer model", models that take into account the influence of social and psychological factors on economic decision-making by agents, models that take into account social welfare and its components, differences in economies in terms of participation in market exchange. The presented study analyzes the linear city model underlying this and other works on this topic. The presented study offers a new look at the phenomena described by other economists and operates not only with theoretical models, but also with digital solutions. Computer technology allows us to model complex economic processes where standard theoretical methods are powerless. However, the weakness of this work lies in the same approach: a large number of prerequisites that do not have a detailed theoretical justification narrow the scope of the research results, thereby leveling their usefulness. The main conclusion is that it is advantageous for firms competing in the habit formation market to differentiate their product as much as possible, taking into account the structure of the consumer’s utility function. The presented research includes the works of the Theory of Consumer Behavior, models of the Theory of Industrial Markets and the Theory of Games.