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On the private and social desirability of mixed bundling in complementary markets with cost savings

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  • Halmenschlager, Christine
  • Mantovani, Andrea

Abstract

We study the private and the social desirability of mixed bundling that generates cost savings in markets for complementary products. Firms always want to adopt such a strategy, and we find that the prices of stand-alone products may decrease when cost savings are important. We also identify an intriguing case where mixed bundling is beneficial for firms, as it depends on the interplay between product substitutability and cost savings in a non-monotonic way. Finally, we highlight situations where private and social interests coincide, and those where they collide.

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  • Halmenschlager, Christine & Mantovani, Andrea, 2017. "On the private and social desirability of mixed bundling in complementary markets with cost savings," Information Economics and Policy, Elsevier, vol. 39(C), pages 45-59.
    • Handle: RePEc:eee:iepoli:v:39:y:2017:i:c:p:45-59
    DOI: 10.1016/j.infoecopol.2017.04.002
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    More about this item

    Keywords

    Mixed bundling; Cost savings; Complementary products; Strategic interaction;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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