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Mixed Bundling and Mergers

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Author Info
Laurent Granier
Marion Podesta

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Abstract

Does bundling trigger mergers? We observe mergers between firms belonging to independent industries. These mergers enable firms to bundle. Indeed, many telephone firms, internet access providers or cable TV operators merge. Thus, the merged firms can provide bundles. Therefore, the question is the following: can bundling strategies allowed by a two-market merger create an incentive to merge? We consider two horizontally differentiated markets. The correlation of reservation prices is the sole link between these two markets. In this framework, we show that bundling strategies create incentives to form multi-markets firms. Merger decisions are endogenous in our model.

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File URL: http://www.laser.univ-montp1.fr/Cahiers/cahier230108.pdf
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Publisher Info
Paper provided by LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1 in its series Cahiers du LASER (LASER Working Papers) with number 2008.23.

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Length: 30 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:mop:lasrwp:2008.23

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Postal: Université de Montpellier 1, Faculté des Sciences Economiques, LASER, Av. de la Mer - Espace Richter, CS 79606, 34960 Montpellier Cedex 2, France
Web page: http://www.laser.univ-montp1.fr
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Related research
Keywords: Product Bundling; Endogenous Mergers; Multi-Market Contacts;

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References listed on IDEAS
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    Other versions:
  4. Adams, William James & Yellen, Janet L, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 90(3), pages 475-98, August. [Downloadable!] (restricted)
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  6. Brito, Duarte, 2003. "Preemptive mergers under spatial competition," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1601-1622, December. [Downloadable!] (restricted)
  7. Ramon Fauli-Oller, 2000. "Takeover Waves," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 9(3), pages 189-210, 06. [Downloadable!] (restricted)
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    Other versions:
  12. Kamien, Morton I & Zang, Israel, 1993. "Monopolization by Sequential Acquisition," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 205-29, October.
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  20. Matsushima, Noriaki, 2001. "Horizontal Mergers and Merger Waves in a Location Model," Australian Economic Papers, Blackwell Publishing, vol. 40(3), pages 263-86, September. [Downloadable!] (restricted)
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