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Bundling without Price Discrimination

Author

Listed:
  • Carvajal, Andrés

    (Department of Economics, University of Warwick)

  • Rostek, Marzena

    (Department of Economics, University of Wisconsin-Madison,)

  • Weretka, Marek

    (Department of Economics, University of Wisconsin-Madison,)

Abstract

This paper examines the optimal bundling strategies of a multiproduct monopoly in markets in which a seller cannot monitor and thereby restrict the purchases of buyers to a single bundle, while buyers have resale opportunities. In such markets, the standard mechanism through which bundling increases seller profits, based on price discrimination, is not feasible. The profit-maximizing bundling strategy is characterized, given the restrictions on pricing policies resulting from resale and a lack of monitoring. The welfare implications of optimal bundling are analyzed.

Suggested Citation

  • Carvajal, Andrés & Rostek, Marzena & Weretka, Marek, 2010. "Bundling without Price Discrimination," The Warwick Economics Research Paper Series (TWERPS) 936, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:936
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2010/twerp_936.pdf
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    Keywords

    Bundling ; Pricing ; Revenue Maximization ; Product Design JEL Codes: D42 ; L12;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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