This paper discusses specific cases in financial regulation, competition law and legal rules in procurement, in light of the economic concept of the efficiency of mixed bundling as derived in our theoretical models. We assess the appropriateness of the existing rules, and also discuss whether there is a need to reform specific legal or regulatory rules in light of the efficiency discussion. We examine the U.S. legal and regulatory framework in government procurement, the offsets case, and finally we look into financial regulation in the case of bundled brokerage and soft commission arrangements on both sides of the Atlantic. The novelty of our models is that we analyze transactions mixed bundling in the cases of monopoly, monopsony and exchange. Additionally, for the cases of monopsony and exchange we consider goods of varying degrees of quality certainty. The common result is the local optimality of the bundling of transactions in terms of expected profits for the price-setting firm, and an overall increase in the level of trade in the goods bundled. In the real-life cases examined, we found that in most instances the authorities have decided that if the practice of pure bundling is present, to replace it with mixed bundling, rather than ban bundling altogether. This practice is correct, as according to our models mixed bundling is efficiency-enhancing (both in profits and in trade volumes). On the other hand, the policy implications derived from our models based on the presence of quality uncertainty suggest that allowing the bundling of dissimilar tasks is beneficial rather than damaging to trade, especially if the goods bundled are of diverse degrees of quality certainty. This is at odds with the current legal and regulation approach to bundling practices.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Find related papers by JEL classification: L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General L4 - Industrial Organization - - Antitrust Issues and Policies K20 - Law and Economics - - Regulation and Business Law - - - General K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: