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Bundling with Resale

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  • Drew Vollmer

    (U.S. Department of Justice)

Abstract

How does resale affect multiproduct bundling? I investigate using a model of monopoly bundling with costly resale. Consumers purchase in the primary market while anticipating resale, then participate in a resale market with market-clearing prices. Resale forces the monopolist to balance the additional profit from a discounted bundle against the opportunity for consumer arbitrage. In equilibrium, the monopolist may still other a discounted bundle, but resale reduces the returns to bundling and has an ambiguous effect on consumer and total welfare. When consumers have heterogeneous costs of resale, it is possible for consumers to resell in equilibrium.

Suggested Citation

  • Drew Vollmer, 2022. "Bundling with Resale," EAG Discussions Papers 202203, Department of Justice, Antitrust Division.
    • Handle: RePEc:doj:eagpap:202203
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    File URL: https://www.justice.gov/atr/abstract-bundling-resale
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