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The Strategic Interplay Between Bundling and Merging in Complementary Markets

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  • Andrea Mantovani
  • Jan Vandekerckhove

Abstract

In this paper, the firms within two pairs of complementors decide whether to merge and eventually bundle their products. Depending on the competitive pressure in the market, either the firms within both pairs merge, with or without bundling, or only one pair merges and bundles, whereas the other one remains independent. The latter case can be harmful for consumers as overall prices surge. We also consider the case where a pair moves before the other. Interestingly, we find a parametric region where the first movers merge, but refrain from bundling, to not induce rivals to merge as well. Copyright © 2014 John Wiley & Sons, Ltd.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:mgtdec:v:37:y:2016:i:1:p:19-36
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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