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Bundling and International Market Segmentation

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Author Info

  • Horn, H.
  • Shy, O.

Abstract

This paper shows how firms, by bundling their products with nontradables, may contribute to the segmentation of international oligopoly markets. The authors develop a simple example with two products: one that is homogeneous across markets and one that is bundled with a nontradable, e.g., local services. Integration of the markets for the homogeneous product yields the expected price equalization across markets. However, integration of the markets for bundled products leaves the economy entirely unaffected. Hence, the standard methodology of comparing a 'segmented' and an 'integrated' equilibrium would exaggerate the effects of integration in this economy. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 369.

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Length: 24 pages
Date of creation: 1994
Date of revision:
Handle: RePEc:mie:wpaper:369

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Postal: ANN ARBOR MICHIGAN 48109
Web page: http://www.fordschool.umich.edu/rsie/
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Keywords: economic integration;

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Cited by:
  1. Markus Kelle, 2012. "Crossing Industrial Borders: German Manufacturers as Services Exporters," Development Working Papers 329, Centro Studi Luca d\'Agliano, University of Milano, revised 27 Mar 2012.
  2. Ganslandt, Mattias, 2001. "Strategic Investment and Market Integration," Working Paper Series 560, Research Institute of Industrial Economics.
  3. Ueltschy, Linda C. & Laroche, Michel & Tamilia, Robert D. & Yannopoulos, Peter, 2004. "Cross-cultural invariance of measures of satisfaction and service quality," Journal of Business Research, Elsevier, vol. 57(8), pages 901-912, August.
  4. Friberg, Richard, 2001. "Two monies, two markets?: Variability and the option to segment," Journal of International Economics, Elsevier, vol. 55(2), pages 317-327, December.

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