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Premium Bundling


  • Cready, William M


This paper extends W. J. Adams and J. L. Yellen's (1976) well-known mixed-bundling pricing model by examining the case of sellers pricing bundles of goods or services at a premium relative to the prices charged on bundle components; that is, sellers price discriminate by charging more, rather than less, at the margin for bundles relative to components. The analysis demonstrates that sellers can, and perhaps do, employ premium bundling by the skillful use of cents-off coupons, rebates, or direct knowledge of their customers. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Cready, William M, 1991. "Premium Bundling," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 173-179, January.
  • Handle: RePEc:oup:ecinqu:v:29:y:1991:i:1:p:173-79

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    References listed on IDEAS

    1. William D. Nordhaus, 1980. "Policy Responses to the Productivity Slowdown," Cowles Foundation Discussion Papers 555, Cowles Foundation for Research in Economics, Yale University.
    2. Zvi Griliches, 1998. "Productivity Growth and R&D at the Business Level: Results from the PIMS Data Base," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 134-156 National Bureau of Economic Research, Inc.
    3. Minasian, Jora R, 1969. "Research and Development, Production Functions, and Rates of Return," American Economic Review, American Economic Association, vol. 59(2), pages 80-85, May.
    4. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
    5. Link, Albert N, 1981. "Basic Research and Productivity Increase in Manufacturing: Additional Evidence," American Economic Review, American Economic Association, vol. 71(5), pages 1111-1112, December.
    6. Wesley M. Cohen & Richard C. Levin & David C. Mowery, 1987. "Firm Size and R&D Intensity: A Re-Examination," NBER Working Papers 2205, National Bureau of Economic Research, Inc.
    7. Stern, Robert M & Baum, Christopher F & Greene, Mark N, 1979. "Evidence on Structural Change in the Demand for Aggregate U.S. Imports and Exports," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 179-192, February.
    8. Mansfield, Edwin, 1980. "Basic Research and Productivity Increase in Manufacturing," American Economic Review, American Economic Association, vol. 70(5), pages 863-873, December.
    9. Cohen, Wesley M & Levin, Richard C & Mowery, David C, 1987. "Firm Size and R&D Intensity: A Re-examination," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 543-565, June.
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    Cited by:

    1. Andrea Mantovani & Jan Vandekerckhove, 2016. "The Strategic Interplay Between Bundling and Merging in Complementary Markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 37(1), pages 19-36, January.
    2. Andrea Mantovani, 2013. "The Strategic Effect of Bundling: A New Perspective," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 25-43, February.
    3. Uri Ben-Zion & Aharon Hibshoosh & Uriel Spiegel, 2000. "Price Discrimination by Coupons Restriction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(3), pages 325-331.

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