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Bundled procurement

Yongmin Chen () and Jianpei Li

Journal of Public Economics, 2018, vol. 159, issue C, 116-127

Abstract: When procuring multiple products from competing sellers, a buyer may choose separate purchase, pure bundling, or mixed bundling. We show that pure bundling maximizes buyer surplus when there are two sellers and trade for each good is likely efficient, whereas separate purchase can be optimal for the buyer when there are more sellers or one good has a low probability of trade. We explain how these results are related to the reduction of sellers' cost dispersion and the potential “adverse tying” under bundling. Remarkably, mixed bundling is dominated under procurement, in contrast to the finding under monopoly bundled sales.

Keywords: Procurement; Bundled procurement; Separate purchase; Bundling; Mixed bundling (search for similar items in EconPapers)
JEL-codes: D21 H57 L24 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Bundled procurement (2015) Downloads
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DOI: 10.1016/j.jpubeco.2018.02.004

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