Competitive Mixed Bundling and Consumer Surplus

John Thanassoulis

No 263, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Mixed bundling in imperfectly competitive industries causes some prices to rise and others to fall. This paper studies under what conditions mixed bundling works for or against the consumer interest. We find that if buyers incur firm specific costs or have shop specific tastes then competitive mixed bundling lowers consumer surplus overall and raises profits - the same is true of competitive volume discounts. Competition without these discounts causes all prices to be kept low as larger customers are targeted; with discounts the prices for heavy users drop, but more is extracted from small users. The consumer surplus result is reversed if the differentiation between components as opposed to firms is key.

Keywords: Bundling; Loyalty Rebates; Volume Discounts; Competitive Price Discrimination (search for similar items in EconPapers)
JEL-codes: L11 L41 (search for similar items in EconPapers)
Date: 2006-05-01
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Journal Article: Competitive Mixed Bundling and Consumer Surplus (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:263

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