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Bundling and competition for slots: On the portfolio effects of bundling

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  • Doh-Shin Jeon
  • Domenico Menicucci

Abstract

We consider competition among sellers when each of them sells a portfolio of distinct products to a buyer having limited slots. We study how bundling affects competition for slots. Under independent pricing, equilibrium often does not exist and hence the outcome is often inefficient. When bundling is allowed, each seller has an incentive to bundle his products and an efficient equilibrium always exists. Furthermore, in the case of digital goods, all equilibria are efficient if slotting contracts are prohibited. We also identify portfolio effects of bundling and analyze the consequences on horizontal mergers. Finally, we derive clear-cut policy implications.

Suggested Citation

  • Doh-Shin Jeon & Domenico Menicucci, 2009. "Bundling and competition for slots: On the portfolio effects of bundling," Economics Working Papers 1152, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2009.
  • Handle: RePEc:upf:upfgen:1152
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    References listed on IDEAS

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    Cited by:

    1. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: Sequential Pricing," TSE Working Papers 09-074, Toulouse School of Economics (TSE).

    More about this item

    Keywords

    Bundling; Portfolios; Slots (or Shelf Space); Pure Bundling; Slotting Contracts; Exclusive Dealing; Foreclosure;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • 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
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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