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Bundling

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  • Barry Nalebuff

Abstract

In this paper, we look at the case for bundling in an oligopolistic environment. We show that bundling is a particularly effective entry-deterrent strategy. A company that has market power in two goods, A and B, can, by bundling them together, make it harder for a rival with only one of these goods to enter the market. Bundling allows an incumbent to defend both products without having to price low in each. The traditional explanation for bundling that economists have given is that it serves as an effective tool of price discrimination by a monopolist. Although price discrimination provides

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  • Barry Nalebuff, 1999. "Bundling," Yale School of Management Working Papers ysm126, Yale School of Management, revised 01 Dec 2000.
    • Handle: RePEc:ysm:somwrk:ysm126
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    File URL: http://icfpub.som.yale.edu/publications/2544
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