PAYING FOR LOYALTY: PRODUCT BUNDLING IN OLIGOPOLY*

Joshua Gans and Stephen King

Journal of Industrial Economics, 2006, vol. 54, issue 1, 43-62

Abstract: In recent times, pairs of retailers such as supermarket and retail gasoline chains have offered bundled discounts to customers who buy their respective product brands. These discounts are a fixed amount off the headline prices that allied brands continue to set independently. We show that a pair of firms can profit from offering a bundled discount to the detriment of other firms and consumers whose preferences are farther removed from the bundled brands. Indeed, when both pairs of firms negotiate bundling arrangements, there are no beneficiaries and consumers simply find themselves consuming a sub‐optimal brand mix.

Date: 2006
References: View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
https://doi.org/10.1111/j.1467-6451.2006.00275.x

Related works:
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:bla:jindec:v:54:y:2006:i:1:p:43-62

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-1821

Access Statistics for this article

Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

More articles in Journal of Industrial Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().