Bundling by competitors and the sharing of profits
We discuss the effects of bundling two goods offered by two symmetric firms. This situation requires the use of some sharing rule for the profits from the sales of the bundle. We show that the choice of this rule may have substantial effects on prices and profits – even if the possible rules eventually yield equal shares. In particular, the use of the a priori equal sharing rule yields lower prices and profits, than a price weighted sharing rule. When competitors bundle, they can implicitly cooperate via the setting of the profit sharing rule and increase their profits at the expense of consumers. This issue calls for some further attention by regulators.
(This abstract was borrowed from another version of this item.)
|Date of creation:||2007|
|Date of revision:|
|Publication status:||Published in: Economics Bulletin (2007) v.12,p.1-9|
|Contact details of provider:|| Postal: |
Web page: http://difusion.ulb.ac.be
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- GINSBURGH, Victor & ZANG, Israël, 2002.
"The museum pass game and its value,"
CORE Discussion Papers
2002041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- GINSBURGH, Victor & ZANG, Israel, . "The museum pass game and its value," CORE Discussion Papers RP -1615, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Victor Ginsburgh & ISRAEL Zang, 2003. "The museum pass game and its value," ULB Institutional Repository 2013/1683, ULB -- Universite Libre de Bruxelles.
- Schmalensee, Richard, 1984. "Gaussian Demand and Commodity Bundling," The Journal of Business, University of Chicago Press, vol. 57(1), pages S211-30, January.
- Matutes, Carmen & Regibeau, Pierre, 1992. "Compatibility and Bundling of Complementary Goods in a Duopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 37-54, March.
- Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 159-187, February.
- Adams, William James & Yellen, Janet L, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 90(3), pages 475-98, August.
- Gregory Crawford, 2008. "The discriminatory incentives to bundle in the cable television industry," Quantitative Marketing and Economics, Springer, vol. 6(1), pages 41-78, March.
- Gregory S. Crawford, 2000. "The Impact of the 1992 Cable Act on Household Demand and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 422-450, Autumn.
When requesting a correction, please mention this item's handle: RePEc:ulb:ulbeco:2013/7280. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels)
If references are entirely missing, you can add them using this form.