Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Monday, July 12, 2010

Bundling without Price Discrimination

Posted by D. Daniel Sokol

Andrés Carvajal (Department of Economics, University of Warwick), Marzena Rostek (Department of Economics, University of Wisconsin-Madison), and Marek Weretka (Department of Economics, University of Wisconsin-Madison) offer the possibility of Bundling without Price Discrimination.

ABSTRACT: This paper examines the optimal bundling strategies of a multiproduct monopoly in markets in which a seller cannot monitor and thereby restrict the purchases of buyers to a single bundle, while buyers have resale opportunities. In such markets, the standard mechanism through which bundling increases seller profits, based on price discrimination, is not feasible. The profit-maximizing bundling strategy is characterized, given the restrictions on pricing policies resulting from resale and a lack of monitoring. The welfare implications of optimal bundling are analyzed. 

http://lawprofessors.typepad.com/antitrustprof_blog/2010/07/bundling-without-price-discrimination-.html

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