The Strategic Interplay Between Bundling and Merging in Complementary Markets

Andrea Mantovani and Jan Vandekerckhove

Managerial and Decision Economics, 2016, vol. 37, issue 1, 19-36

Abstract: In this paper, the firms within two pairs of complementors decide whether to merge and eventually bundle their products. Depending on the competitive pressure in the market, either the firms within both pairs merge, with or without bundling, or only one pair merges and bundles, whereas the other one remains independent. The latter case can be harmful for consumers as overall prices surge. We also consider the case where a pair moves before the other. Interestingly, we find a parametric region where the first movers merge, but refrain from bundling, to not induce rivals to merge as well. Copyright © 2014 John Wiley & Sons, Ltd.

Date: 2016
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Related works:
Working Paper: The strategic interplay between bundling and merging in complementary markets (2012)
Working Paper: The strategic interplay between bundling and merging in complementary markets (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:37:y:2016:i:1:p:19-36

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