PROFITABILITY OF PRODUCT BUNDLING

Yongmin Chen and Michael H. Riordan

International Economic Review, 2013, vol. 54, issue 1, 35-57

Abstract: Using copulas to model the stochastic dependence of values, this article establishes new general conditions for the profitability of product bundling. A multiproduct monopolist generally achieves higher profit from mixed bundling than from separate selling if consumer values for two of its products are negatively dependent, are independent, or have sufficiently limited positive dependence. The profitability of monopoly bundling also extends to situations where a multiproduct firm competes with a single‐product rival.

Date: 2013
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https://doi.org/10.1111/j.1468-2354.2012.00725.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:iecrev:v:54:y:2013:i:1:p:35-57

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