Shopping hours and bundling as an entry barrier
This paper presents a simple model of regulated/deregulated shopping hours and bundling in markets where consumers have preference in shopping time. We show that, for a range of parameters, the market will change from a duopoly with an independent pricing regime when shopping hours are regulated, to a monopoly regime with bundling of products, when shopping hours are deregulated. For the rest range of parameters, market structure does not change after deregulation. Finally, deregulation tends to increase the range of parameters over which bundling is a profitable strategy. Thus, the message of this paper is that deregulation increases the strategic incentive to bundle as a mechanism to deter entry.
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- Carbajo, Jose & de Meza, David & Seidmann, Daniel J, 1990. "A Strategic Motivation for Commodity Bundling," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 283-98, March.
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