A More General Theory of Commodity Bundling

Mark Armstrong

No 624, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: This paper discusses the incentive to bundle when consumer valuations are non-additive and/or when products are supplied by separate sellers. Whether integrated or separate, a firm has an incentive to introduce a bundle discount when demand for the bundle is more elastic than the overall demand for products. When separate sellers coordinate on a bundle discount, they can use the discount to relax competition, which can harm welfare.

Keywords: Price discrimination; Bundling; Discrete choice; Oligopoly; Common agency (search for similar items in EconPapers)
JEL-codes: D11 D43 D82 D86 L13 L41 (search for similar items in EconPapers)
Date: 2012-09-28
New Economics Papers: this item is included in nep-bec, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: A more general theory of commodity bundling (2013)
Working Paper: A more general theory of commodity bundling (2012)
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