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Input Price Discrimination with Bundling

Author

Listed:
  • Qing Hu

    (Kansai University)

  • Ryo Masuyama

    (Kushiro Public University of Economics and Kobe University)

  • Tomomichi Mizuno

    (Kobe University)

Abstract

This paper examines how bundling affects the welfare comparison between input price discrimination (IPD) and uniform input pricing (UIP) in a vertical market structure with Cournot competition. A multi-product firm bundles its products across a competitive market and a monopoly market, while an upstream supplier provides inputs only to the competitive market. When the inefficient firm is the bundling firm, IPD can increase total surplus relative to UIP if the monopoly market is sufficiently small. When the efficient firm is the bundling firm, however, IPD always reduces both consumer and total surpluses.

Suggested Citation

  • Qing Hu & Ryo Masuyama & Tomomichi Mizuno, 2026. "Input Price Discrimination with Bundling," Discussion Papers 2610, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:2610
    as

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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2026/2610.pdf
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    References listed on IDEAS

    as
    1. Youping Li & Jie Shuai, 2022. "Input price discrimination and horizontal shareholding," Journal of Regulatory Economics, Springer, vol. 61(1), pages 48-66, February.
    2. Hinloopen, Jeroen & Müller, Wieland & Normann, Hans-Theo, 2014. "Output commitment through product bundling: Experimental evidence," European Economic Review, Elsevier, vol. 65(C), pages 164-180.
    3. Qing Hu & Tomomichi Mizuno & Junghyun Song, 2022. "Input price discrimination with passive partial ownership," Applied Economics Letters, Taylor & Francis Journals, vol. 29(8), pages 713-717, May.
    4. Anil Arya & Brian Mittendorf, 2010. "Input Price Discrimination When Buyers Operate In Multiple Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 58(4), pages 846-867, December.
    5. Yoshihiro Yoshida, 2000. "Third-Degree Price Discrimination in Input Markets: Output and Welfare," American Economic Review, American Economic Association, vol. 90(1), pages 240-246, March.
    6. Martin, Stephen, 1999. "Strategic and welfare implications of bundling," Economics Letters, Elsevier, vol. 62(3), pages 371-376, March.
    7. Germain Gaudin & Romain Lestage, 2022. "Input Price Discrimination, Demand Forms, And Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 70(4), pages 1033-1057, December.
    8. DeGraba, Patrick, 1990. "Input Market Price Discrimination and the Choice of Technology," American Economic Review, American Economic Association, vol. 80(5), pages 1246-1253, December.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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