Shopping hours and bundling as an entry barrier
AbstractThis paper presents a simple model of regulated/deregulated shopping hours and bundling in markets where consumers have preference in shopping time. We show that, for a range of parameters, the market will change from a duopoly with an independent pricing regime when shopping hours are regulated, to a monopoly regime with bundling of products, when shopping hours are deregulated. For the rest range of parameters, market structure does not change after deregulation. Finally, deregulation tends to increase the range of parameters over which bundling is a profitable strategy. Thus, the message of this paper is that deregulation increases the strategic incentive to bundle as a mechanism to deter entry.
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Bibliographic InfoPaper provided by Universidade de Vigo, Departamento de Economía Aplicada in its series Working Papers with number 0608.
Length: 33 pages
Date of creation: Oct 2006
Date of revision:
Shopping hours; Bundling; Foreclosure.;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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- Carbajo, Jose & de Meza, David & Seidmann, Daniel J, 1990. "A Strategic Motivation for Commodity Bundling," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 283-98, March.
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