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On Bundling and Entry Deterrence

Author

Listed:
  • Andrea Greppi

    (Università degli Studi di Bologna)

  • Domenico Menicucci

    (Università degli Studi di Firenze)

Abstract

A multiproduct incumbent firm faces the threat of entry from another multiproduct (generalist) firm or from single-product (specialist) firms. Assuming that the incumbent offers higher quality products than its rivals, we inquire whether the possibility of bundling by the incumbent is more effective in deterring entry in one setting or the other, and explore how the quality difference affects the comparison. For instance, for relatively high-quality differences the generalist is more vulnerable to bundling than are the specialists; but bundling is a credible action for the incumbent more often against specialists than against the generalist.

Suggested Citation

  • Andrea Greppi & Domenico Menicucci, 2021. "On Bundling and Entry Deterrence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(4), pages 561-581, June.
  • Handle: RePEc:kap:revind:v:58:y:2021:i:4:d:10.1007_s11151-020-09785-9
    DOI: 10.1007/s11151-020-09785-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Competitive bundling; Entry deterrence; Vertical differentiation;
    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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