Dominance and Competitive Bundling

Sjaak Hurkens, Doh-Shin Jeon and Domenico Menicucci

American Economic Journal: Microeconomics, 2019, vol. 11, issue 3, 1-33

Abstract: We study how bundling affects competition between two asymmetric multi-product firms. One firm dominates the other in that it produces better products more efficiently. For low (high) levels of dominance, bundling intensifies (relaxes) price competition and lowers (raises) both firms' profits. For intermediate dominance levels, bundling increases the dominant firm's market share substantially, thereby raising its profit while reducing its rival's profit. Hence, the threat to bundle is then a credible foreclosure strategy. We also identify circumstances in which a firm that dominates only in some markets can profitably leverage its dominance to other markets by tying all its products.

JEL-codes: D43 K21 L13 L41 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mic.20170131
References: Add references at CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20170131 (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20170131.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20170131.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Dominance and Competitive Bundling (2018)
Working Paper: Dominance and Competitive Bundling (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmic:v:11:y:2019:i:3:p:1-33

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().