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Mixed bundling may hinder collusion

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  • Baranes, Edmond
  • Podesta, Marion
  • Poudou, Jean-Christophe

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.

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  • Baranes, Edmond & Podesta, Marion & Poudou, Jean-Christophe, 2016. "Mixed bundling may hinder collusion," Research in Economics, Elsevier, vol. 70(4), pages 638-658.
    • Handle: RePEc:eee:reecon:v:70:y:2016:i:4:p:638-658
    DOI: 10.1016/j.rie.2016.06.003
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