The strategic interplay between bundling and merging in complementary markets
AbstractIn this paper, two pairs of complementors have to decide whether to merge and eventually bundle their products. Depending on the degree of competitive pressure in the market, either both pairs decide to merge (with or without bundling), or only one pair merges and bundles, while rivals remain independent. The latter case can very harmful for consumers as it brings surge in prices. We also consider the case in which one pair moves first. Interestingly, we find a parametric region where first movers merge but refrain from bundling, to not induce rivals to merge as well.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2012/10.
Length: 30 pages
Date of creation: 2012
Date of revision:
Bundling; merger; strategic interaction; antitrust;
Other versions of this item:
- A. Mantovani & J. Vandekerckhove, 2012. "The strategic interplay between bundling and merging in complementary markets," Working Papers wp814, Dipartimento Scienze Economiche, Universita' di Bologna.
- D43 - Microeconomics - - Market Structure and Pricing - - - 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-02 (All new papers)
- NEP-BEC-2012-05-02 (Business Economics)
- NEP-COM-2012-05-02 (Industrial Competition)
- NEP-IND-2012-05-02 (Industrial Organization)
- NEP-MKT-2012-05-02 (Marketing)
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