Model for Studying Commodity Bundling with a Focus on Consumer Preference

Jungwoo Shin, Chang Seob Kim and Jongsu Lee ()

No 200934, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: This research complements demand side analysis of previous commodity bundling studies in which oligopoly models and game theory were used. According to demand side analysis, this study proposes the use of discrete-continuous consumption behavior applied to a commodity bundling model that incorporates consumer heterogeneity to analyze the effect of bundling strategies. Previous researchers have assumed a simple consumer utility model such that the heterogeneity of consumer preference is not reflected. Most analyzed effects of commodity bundling by focusing on firm behavior. However, to measure the results of the competition of bundling strategy, analysis of commodity bundling that is based on consumer preference is useful. Unlike previous research, this study proposes a model that directly analyzes consumer behavior for commodity bundling. This study conducted empirical analysis, obtained from data on information communication technology (hereafter, ICT) service subscription and usage in Korea, to validate the proposed model. The empirical results show that the proposed model is useful to analyze the effects of bundling for various services and products.

Keywords: Bayesian estimation; Commodity bundling; Consumer heterogeneity; Game theory; Mixed multiple discrete-continuous extreme value model; Oligopoly model (search for similar items in EconPapers)
JEL-codes: C11 C35 D11 D12 L40 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-11, Revised 2009-11
New Economics Papers: this item is included in nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://temep-repec.my-groups.de/DP-34.pdf First version, 2009 (application/pdf)

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Working Paper: Model for Studying Commodity Bundling with a Focus on Consumer Preference (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:snv:dp2009:200934

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