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Mixed bundling may hinder collusion

Edmond Baranes (), Marion Podesta () and Jean-Christophe Poudou ()
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Edmond Baranes: CREDEN - Centre de Recherche en Economie et Droit de l'ENergie - UM1 - Université Montpellier 1

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Abstract: We study the incentives to collude when firms use mixed bundling or independent pricing strategies for the sale of two components of a composite good. The main finding is that collusion is less sustainable under mixed bundling, because this increases the profitability of deviations from the collusive path. The result is robust to extensions with an endogenous choice of the mode of competition (with bundling or independent pricing) and to competition in quantities. These results offer a novel argument against a per se rule concerning bundling in antitrust policy.

Keywords: Mixed bundling; Collusion; Price competition (search for similar items in EconPapers)
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Date: 2016-12
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Published in Research in Economics, Elsevier, 2016, 70 (4), pp.638 - 658. ⟨10.1016/j.rie.2016.06.003⟩

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