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Intertemporal bundling

Author

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  • Lu, Jingfeng
  • Zhao, Wenbo

Abstract

This paper studies when and how intertemporal bundling arises in optimal dynamic selling mechanisms in a two-period setting, where two objects (A and B) are sequentially available for sale. When the buyer’s values of the two objects (vA and vB respectively) are independent, in contrast to conventional insight from simultaneous sales, we find in our setting that there is no loss in relying on separate sales for optimal design. This result extends under widely adopted regularity conditions when the values are positively correlated in the sense that vB is stochastically increasing in vA. However, if vB is stochastically decreasing in vA, separate sales are no longer optimal, and the optimal integrated design features intertemporal bundling. When it is always efficient to provide each good, the optimal selling mechanism is implemented by offering a menu of intertemporal bundles with different prices, where each bundle consists of the second object together with a probabilistic proportion of the first object. In particular, if the buyer’s virtual value of the first good is always non-negative, pure bundling becomes optimal.

Suggested Citation

  • Lu, Jingfeng & Zhao, Wenbo, 2026. "Intertemporal bundling," Journal of Economic Theory, Elsevier, vol. 231(C).
    • Handle: RePEc:eee:jetheo:v:231:y:2026:i:c:s0022053125001735
    DOI: 10.1016/j.jet.2025.106127
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    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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