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Bundling and the GE-Honeywell Merger

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  • Barry Nalebuff

    ()
    (School of Management)

Abstract

The economic theory of bundling has moved from the classroom and academic journals to the public policy arena. Its debut was dramatic. On July 3, 2001, the European Commission blocked the $42 billion merger between GE and Honeywell. A primary reason for their objection to this combination was a concern over bundling. This paper uses the context of the proposed GE-Honeywell merger to address the concerns raised by bundling. We set out the theory as put forth by the Commission and try to reconcile this theory with both the economic theory of bundling and the facts of the case. We discuss what is meant by bundling and explain when it is a potential problem and when it is not. Based on this understanding, we propose anti-trust policy recommendations to deal with the novel issues raised by bundling.

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Bibliographic Info

Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm303.

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Date of creation: 05 Sep 2002
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Handle: RePEc:ysm:somwrk:ysm303

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Web page: http://icf.som.yale.edu/
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Related research

Keywords: Bundling; Antitrust; EU; GE; Honeywell;

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Cited by:
  1. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Oliver Budzinski & Isabel Ruhmer, 2009. "Merger Simulation in Competition Policy: A Survey," Working Papers 82/09, University of Southern Denmark, Department of Environmental and Business Economics.
  3. Flores-Fillol, Ricardo & Moner Colonques, Rafael, 2010. "Endogenous Mergers of Complements with Mixed Bundling," Working Papers 2072/151551, Universitat Rovira i Virgili, Department of Economics.
  4. Noriaki Matsushima & Tomomichi Mizuno, 2009. "Input specificity and product differentiation," ISER Discussion Paper 0745, Institute of Social and Economic Research, Osaka University.
  5. Oliver Budzinski & Arndt Christiansen, 2007. "The Oracle/PeopleSoft Case: Unilateral Effects, Simulation Models and Econometrics in Contemporary Merger Control," Marburg Working Papers on Economics 200702, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  6. Lars-Hendrik Roeller & Oliver Stehmann, 2006. "The Year 2005 at DG Competition: The Trend towards a More Effects-Based Approach," Review of Industrial Organization, Springer, vol. 29(4), pages 281-304, December.

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