Exclusionary Bundling and the Effects of a Competitive Fringe
Vernon Smith and
Bart Wilson ()
Journal of Institutional and Theoretical Economics (JITE), 2007, vol. 163, issue 1, 109-132
The traditional analysis of exclusionary bundling examines the impact of a monopolist bundling product A with another product B, which is competitively provided. Using experimental posted-offer markets, we investigate the exclusionary and welfare implications of having a fringe competitor in the A market. We find that the fringe seller increases the consumer surplus while decreasing the seller surplus and that the fringe seller does not affect the consumer surplus extracted from the bundle despite a decrease in the bundle transaction price. The consumer surplus gains generated by the fringe seller erode if the dominant seller has a lower average cost.
JEL-codes: C99 D43 K21 L13 L41 (search for similar items in EconPapers)
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