Thursday, December 13, 2018

Mixed bundling may hinder collusion

Edmond Baranes (CREDEN - Centre de Recherche en Economie et Droit de l'ENergie - UM1 - Université Montpellier 1); Marion Podesta (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); and Jean-Christophe Poudou (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) argue Mixed bundling may hinder collusion.

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.

https://lawprofessors.typepad.com/antitrustprof_blog/2018/12/mixed-bundling-may-hinder-collusion.html

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