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On the Profitability of Interfirm Bundling in Oligopolies

Sang-Hyun Kim () and Jong-Hee Hahn ()

No 2017rwp-114, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: This paper examines the pro?tability of bundling or exclusive dealing among independent ?rms selling di¢´erentiated products. We show that, compared with separate sales, inter?rm bundling generally raises prices and is more pro?table provided the distribution of consumer valuations for products are sufficiently sym- metric and centered in the middle. Hence the firms have mutual incentives to o¢´er their products as a bundle or make exclusive dealing arrangements. We shed new light on the role of bundling in relaxing competition in oligopoly, the importance of which has been neglected in the previous literatures.

Keywords: interfirm bundling; (in)compatibility; exclusive dealing; antitrust (search for similar items in EconPapers)
JEL-codes: L11 L13 (search for similar items in EconPapers)
Pages: 24pages
Date: 2017-09
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
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