Multimarket Contact, Bundling and Collusive Behavior
AbstractWe study the static and dynamic implications of non-linear pricing schemes (i.e., bundling) for otherwise unrelated products but for multimarket contact. Bundling is always present in competition but unlikely in a cartel agreement. Although it brings extra profits to the cartel Â–sometimes charging a premium rather than a discount for the bundleÂ–, bundling makes deviation from the agreement far more attractive. Depending on the correlation of consumersÂ’ preferences, this deviation effect is either reinforced with milder punishments (for positive correlations) or partially offset with harsher punishments (for negative correlations). The deviation effect is so strong that it even dominates a zero-profit (pure-bundling) punishment.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 420.
Date of creation: 2012
Date of revision:
multimarket contact; conglomerate merger; bundling; collusion;
Find related papers by JEL classification:
- 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-2012-07-08 (All new papers)
- NEP-BEC-2012-07-08 (Business Economics)
- NEP-COM-2012-07-08 (Industrial Competition)
- NEP-IND-2012-07-08 (Industrial Organization)
- NEP-MIC-2012-07-08 (Microeconomics)
- NEP-MKT-2012-07-08 (Marketing)
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