Curing Sinus Headaches and Tying Law: An Empirical Analysis of Bundling Decongestants and Pain Relievers
AbstractWe apply and extend the cost-based approach to bundling and tying under competition developed in Evans and Salinger (2004) to over-the-counter pain relievers and cold medicines. We document that consumers pay much less for tablets with multiple ingredients than they would if they bought tablets with each ingredient separately. We then decompose the sources of these savings into marginal cost savings and a component that reflects fixed costs of product offerings. The analysis both documents substantial economies of bundling and illustrates the sort of cost analysis that is necessary for understanding tying.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1519.
Date of creation: 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-29 (All new papers)
- NEP-COM-2005-09-29 (Industrial Competition)
- NEP-HEA-2005-09-29 (Health Economics)
- NEP-IND-2005-09-29 (Industrial Organization)
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.:
- Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
- Timothy F. Bresnahan & Peter C. Reiss, 1987. "Do Entry Conditions Vary across Markets?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 833-882.
- Ariel Pakes & Michael Ostrovsky & Steven Berry, 2007.
"Simple estimators for the parameters of discrete dynamic games (with entry/exit examples),"
RAND Journal of Economics,
RAND Corporation, vol. 38(2), pages 373-399, 06.
- Ariel Pakes & Michael Ostrovsky & Steve Berry, 2004. "Simple Estimators for the Parameters of Discrete Dynamic Games (with Entry/Exit Examples)," Harvard Institute of Economic Research Working Papers 2036, Harvard - Institute of Economic Research.
- Ariel Pakes & Michael Ostrovsky & Steve Berry, 2004. "Simple Estimators for the Parameters of Discrete Dynamic Games (with Entry/Exit Samples)," NBER Working Papers 10506, National Bureau of Economic Research, Inc.
- Evans, David S & Padilla, Atilano Jorge, 2004.
"Designing Antitrust Rules for Assessing Unilateral Practices: A Neo-Chicago Approach,"
CEPR Discussion Papers
4625, C.E.P.R. Discussion Papers.
- David S. Evans & A. Jorge Padilla, 2004. "Designing Antitrust Rules For Assessing Unilateral Practices: A Neo-Chicago Approach," Working Papers wp2004_0417, CEMFI.
- Evans, David S. & Padilla, Jorge, 2004. "Designing Antitrust Rules for Assessing Unilateral Practices: A Neo-Chicago Approach," Working paper 336, Regulation2point0.
- Crawford, Gregory, 2005.
"The Discriminatory Incentives to Bundle in the Cable Television Industry,"
- Gregory Crawford, 2008. "The discriminatory incentives to bundle in the cable television industry," Quantitative Marketing and Economics, Springer, vol. 6(1), pages 41-78, March.
- Ariel Pakes & Paul McGuire, 1994.
"Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model,"
RAND Journal of Economics,
The RAND Corporation, vol. 25(4), pages 555-589, Winter.
- Ariel Pakes & Paul McGuire, 1992. "Computing Markov perfect Nash equilibria: numerical implications of a dynamic differentiated product model," Discussion Paper / Institute for Empirical Macroeconomics 58, Federal Reserve Bank of Minneapolis.
- Ariel Pakes & Paul McGuire, 1992. "Computing Markov Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model," NBER Technical Working Papers 0119, National Bureau of Economic Research, Inc.
- Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
- Chaim Fershtman & Ariel Pakes, 2000.
"A Dynamic Oligopoly with Collusion and Price Wars,"
RAND Journal of Economics,
The RAND Corporation, vol. 31(2), pages 207-236, Summer.
- Fershtman, C. & Pakes, A., 1998. "A Dynamic Oligopoly with Collusion and Price Wars," Papers 26-98, Tel Aviv.
- Chaim Fershtman & Ariel Pakes, 1999. "A Dynamic Oligopoly with Collusion and Price Wars," NBER Working Papers 6936, National Bureau of Economic Research, Inc.
- Fershtman, C. & Pakes, A., 1999. "A Dynamic Oligopoly with Collusion and Price Wars," Discussion Paper 1999-48, Tilburg University, Center for Economic Research.
- Morrison, Steven A & Winston, Clifford, 1987. "Empirical Implications and Tests of the Contestability Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 53-66, April.
- David S. Evans & Michael A. Salinger, 2008. "THE ROLE OF COST IN DETERMINING WHEN FIRMS OFFER BUNDLES -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 143-168, 03.
- Miravete, Eugenio J, 2004. "Are all those Calling Plans Really Necessary? The Limited Gains From Complex Tariffs," CEPR Discussion Papers 4237, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.