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Intertemporal Mixed Bundling and Buying Frenzies

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  • Patrick DeGraba
  • Rafi Mohammed
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    Abstract

    By initially selling goods only in bundles and subsequently selling unsold units individually, a multiproduct seller can create a buying frenzy in which his profit is higher than it would be if he sold all units individually at their market clearing prices. In this frenzy, high-valuation customers buy a bundle because they expect quantity rationing when units are sold individually. Their purchases reduce the quantity to be sold individually, causing the shortages that result in rationing. The bundle's price exceeds the sum of the individual prices, a fact observed in markets for rock concert tickets.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal RAND Journal of Economics.

    Volume (Year): 30 (1999)
    Issue (Month): 4 (Winter)
    Pages: 694-718

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    Handle: RePEc:rje:randje:v:30:y:1999:i:winter:p:694-718

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    Cited by:
    1. Henk Folmer & Auke Leen, 2013. "Why do successful restaurants not raise their prices?," Letters in Spatial and Resource Sciences, Springer, vol. 6(2), pages 81-90, July.

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