Bundling Commodities and Attached Services with Nonlinear Pricing

Marion Podesta () and Jean-Christophe Poudou

No 2012022, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper analyzes optimal nonlinear pricing for a monopoly supplying a bundle of a commodity and a related service, where the consumers’ private information is captured by scalar variable. With constant marginal costs, we find the standard result where the good and the service in the bundle are lower than separately. However, under the increasing cost assumption, when the degree of the complementarity becomes sufficiently high, the marginal price of separate good is lower than the good price in the bundle. Contrary to Martimort (1992), when good and service are perfectly complementary, we can not conclude that it is costly for consumers to sign two contracts from different shops than to buy the bundle. Because of asymmetric properties in the utility function, profitability result of bundling strategy depends, on the one hand, on the degree of complementarity between commodity and related service and on the other hand, on the degree of the optional service.

Keywords: Bundling; Nonlinear pricing; Energy maker (search for similar items in EconPapers)
JEL-codes: D42 L12 Q4 (search for similar items in EconPapers)
Pages: 28
Date: 2012-06-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.jstor.org/stable/41714312 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: Bundling Commodities and Attached Services with Nonlinear Pricing (2012)
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:ctl:louvre:2012022

Access Statistics for this paper

More papers in Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Sebastien SCHILLINGS ().