Price discrimination through transactions bundling: The case of monopsony
This paper shows that for a price setting monopsony, offering to transact in a mixed bundle of goods of uncertain quality is profit enhancing. The magnitude of this enhancement relative to no bundling is greater the smaller the gap in the degree of quality uncertainty between the two goods purchased is. Moreover, contrary to coventional wisdom, the use of mixed purchase bundling by a monopsonist is trade enhancing. There is more room for a dramatic improvement in the volume of trade in a good with a low degree of quality certainty if its purchase is combined with a good of a substantially higher quality certainty.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Choi, C. J. & Dassiou, X. & Maldoom, D., 2003.
"Trade and Linked Exchange; Price Discrimination Through Transaction Bundling,"
03/07, Department of Economics, City University London.
- Dassiou Xeni & Choi Chong Ju & Maldoom Dan, 2004. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-17, May.
- Yannis Bakos & Erik Brynjolfsson, 1997.
"Bundling Information Goods: Pricing, Profits and Efficiency,"
Working Paper Series
199, MIT Center for Coordination Science.
- Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
- Whinston, Michael D, 1990.
"Tying, Foreclosure, and Exclusion,"
American Economic Review,
American Economic Association, vol. 80(4), pages 837-59, September.
- McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
- Dassiou Xeni & Glycopantis Dionysious, 2006. "The Economic Theory of Price Discrimination via Transactions Bundling: An Assessment of the Policy Implications," Review of Law & Economics, De Gruyter, vol. 2(2), pages 323-348, October.
- 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.
- Indranil Chakraborty, 1999. "Bundling decisions for selling multiple objects," Economic Theory, Springer, vol. 13(3), pages 723-733.
- Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 159-187, February.
When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:44:y:2008:i:7-8:p:672-681. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.