Exclusionary Bundling and the Effects of a Competitive Fringe

Anil Caliskan, David Porter, Stephen Rassenti, Vernon L. Smith and Bart J. Wilson ()
Authors registered in the RePEc Author Service: Vernon Smith and Vernon L. Smith

Journal of Institutional and Theoretical Economics (JITE), 2007, vol. 163, issue 1, pages 109-132

Abstract: The traditional analysis of exclusionary bundling examines the impact of a monopolist bundling product A with another product B, which is competitively provided. Using experimental posted-offer markets, we investigate the exclusionary and welfare implications of having a fringe competitor in the A market. We find that the fringe seller increases the consumer surplus while decreasing the seller surplus and that the fringe seller does not affect the consumer surplus extracted from the bundle despite a decrease in the bundle transaction price. The consumer surplus gains generated by the fringe seller erode if the dominant seller has a lower average cost.

JEL-codes: C99 D43 K21 L13 L41 (search for similar items in EconPapers)
Date: 2007

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