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Profitability Of Product Bundling

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  • Yongmin Chen
  • Michael H. Riordan

Abstract

Using copulas to model the stochastic dependence of values, this article establishes new general conditions for the profitability of product bundling. A multiproduct monopolist generally achieves higher profit from mixed bundling than from separate selling if consumer values for two of its products are negatively dependent, are independent, or have sufficiently limited positive dependence. The profitability of monopoly bundling also extends to situations where a multiproduct firm competes with a single‐product rival.

Suggested Citation

  • Yongmin Chen & Michael H. Riordan, 2013. "Profitability Of Product Bundling," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 35-57, February.
    • Handle: RePEc:wly:iecrev:v:54:y:2013:i:1:p:35-57
    DOI: 10.1111/j.1468-2354.2012.00725.x
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    References listed on IDEAS

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