IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v51y2003i3p383-403.html
   My bibliography  Save this article

Bundling and Menus of Two‐Part Tariffs

Author

Listed:
  • Sreya Kolay
  • Greg Shaffer

Abstract

Inducing self‐selection among different segments of consumers is an important issue in pricing. Some firms induce self‐selection by offering a menu of two‐part tariffs (e.g., different rate plans) and letting consumers select the tariff and quantity they prefer. Other firms induce self‐selection by offering a menu of price‐quantity bundles (e.g., different package sizes) and letting consumers select only from among these bundles. We show that bundling is more profitable absent cost considerations. Social welfare may be higher or lower with bundling.

Suggested Citation

  • Sreya Kolay & Greg Shaffer, 2003. "Bundling and Menus of Two‐Part Tariffs," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 383-403, September.
    • Handle: RePEc:bla:jindec:v:51:y:2003:i:3:p:383-403
    DOI: 10.1111/1467-6451.00206
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-6451.00206
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-6451.00206?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    2. Robert D. Willig, 1978. "Pareto-Superior Nonlinear Outlay Schedules," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 56-69, Spring.
    3. Murphy, Michael M, 1977. "Price Discrimination, Market Separation, and the Multi-Part Tariff," Economic Inquiry, Western Economic Association International, vol. 15(4), pages 587-599, October.
    4. Stephen W. Salant, 1989. "When is Inducing Self-Selection Suboptimal for a Monopolist?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 391-397.
    5. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
    6. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    7. Partha Dasgupta & Peter Hammond & Eric Maskin, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 185-216.
    8. A. Michael Spence, 1980. "Multi-Product Quantity-Dependent Prices and Profitability Constraints," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 821-841.
    9. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Suresh P. Sethi & Sushil Gupta & Vipin K. Agrawal & Vijay K. Agrawal, 2022. "Nobel laureates’ contributions to and impacts on operations management," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4283-4303, December.
    2. William S. Lovejoy, 2006. "Optimal Mechanisms with Finite Agent Types," Management Science, INFORMS, vol. 52(5), pages 788-803, May.
    3. Arve, Malin & Zwart, Gijsbert, 2023. "Optimal procurement and investment in new technologies under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    4. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    5. Veiga, André, 2018. "A note on how to sell a network good," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 114-126.
    6. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    7. Corchón, Luis C., 2008. "The theory of implementation : what did we learn?," UC3M Working papers. Economics we081207, Universidad Carlos III de Madrid. Departamento de Economía.
    8. Gérard Mondello, 2012. "Strict Liability, Capped Strict Liability, and Care Effort under Asymmetric Information," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(2), pages 232-251, June.
    9. Dirk Bergemann & Alessandro Pavan, 2015. "Introduction to JET Symposium Issue on "Dynamic Contracts and Mechanism Design"," Cowles Foundation Discussion Papers 2016, Cowles Foundation for Research in Economics, Yale University.
    10. Amrstong, Mark & Cowan, Simon & Vickers, John, 1995. "Nonlinear pricing and price cap regulation," Journal of Public Economics, Elsevier, vol. 58(1), pages 33-55, September.
    11. Kunimoto, Takashi & Serrano, Roberto, 2020. "Rationalizable Incentives: Interim Implementation of Sets in Rationalizable Strategies," Economics and Statistics Working Papers 4-2020, Singapore Management University, School of Economics.
    12. Pascal Courty & Li Hao, 2000. "Sequential Screening," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 697-717.
    13. Claude d'Aspremont & Jacques Crémer & Louis-André Gérard-Varet, 2003. "Correlation, independence, and Bayesian incentives," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(2), pages 281-310, October.
    14. Sato, Susumu, 2019. "Freemium as optimal menu pricing," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 480-510.
    15. B. Caillaud & R. Guesnerie & P. Rey & J. Tirole, 1988. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 1-26, Spring.
    16. Alfonso J. Pedraza-Martinez & Sameer Hasija & Luk N. Van Wassenhove, 2020. "Fleet Coordination in Decentralized Humanitarian Operations Funded by Earmarked Donations," Operations Research, INFORMS, vol. 68(4), pages 984-999, July.
    17. Marinov, Eduard, 2008. "Нобеловата Награда За Икономика За Икономика 2007: Теорията За Икономическите Механизми [The Nobel Price for Economics 2007: The Design of Economic Institutions]," MPRA Paper 60294, University Library of Munich, Germany.
    18. Andersson, Tommy, 2004. "Essays on Nonlinear Pricing and Welfare," MPRA Paper 59446, University Library of Munich, Germany.
    19. Wayne Y. Lee & Anjan V. Thakor, 1982. "Optimal Regulatory Pricing Under Asymmetric Cost Information," Discussion Papers 580, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    20. Chen, Jiakai, 2021. "LIBOR's poker," Journal of Financial Markets, Elsevier, vol. 55(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:51:y:2003:i:3:p:383-403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.