When Is Pure Bundling Optimal?

Commodity Bundling and the Burden of Monopoly

Nima Haghpanah and Jason Hartline

The Review of Economic Studies, 2021, vol. 88, issue 3, 1127-1156

Abstract: We study when pure bundling, i.e., offering only the grand bundle of all products, is optimal for a multi-product monopolist. Pure bundling is optimal if consumers with higher values for the grand bundle have higher relative values for smaller bundles compared to the grand bundle. Conversely, pure bundling is not optimal if consumers with higher values for the grand bundle have lower relative values. We prove the results by decomposing the problem into simpler ones in which types can be ranked according to their values for the grand bundle.

Keywords: Bundling; Multi-product monopolist; Multi-dimensional screening; D420; D820; L120 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (11)

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