Segmentation Versus Integration: The Case of Non‐Homogeneous Groups

U. Spiegel and J. Templeman

Manchester School, 2004, vol. 72, issue 1, 131-151

Abstract: The paper adds another dimension to the literature on bundling as a profit‐maximizing strategy. We compare policies of joint consumption and segmentation of a profit maximizer. In the case of positive social influences between two population groups ‘bundling’ is preferred to segmentation, while under negative symmetric inter‐group effects (based perhaps on race, religion, status etc.) segmentation is preferred. Our contribution lies in the examination of joint consumption versus segmentation under asymmetric inter‐group effects, with and without price discrimination. This can occur when non‐homogeneous groups share the same residency, school or other local public institutions.

Date: 2004
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https://doi.org/10.1111/j.1467-9957.2004.00384.x

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