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Exploring Bundling Theory with Geometry

John Eckalbar ()

The Journal of Economic Education, 2006, vol. 37, issue 1, 68-82

Abstract: Abstract : The author shows how instructors might successfully introduce students in principles and intermediate microeconomic theory classes to the topic of bundling (i.e., the selling of two or more goods as a package, rather than separately). It is surprising how much students can learn using only the tools of high school geometry. To be specific, one can prove that with independently distributed reservation prices, pure bundling raises both profits and consumers' surplus. The author also explores the topic of mixed bundling (i.e., when both bundles and separate sales are conducted).

Date: 2006
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DOI: 10.3200/JECE.37.1.68-82

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