Journal
JOURNAL OF ECONOMIC THEORY
Volume 148, Issue 2, Pages 448-472Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.jet.2012.12.004
Keywords
Price discrimination; Bundling; Discrete choice; Oligopoly; Common agency
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This paper discusses the incentive to bundle when consumer valuations are non-additive and/or when products are supplied by separate sellers. Whether integrated or separate, a firm has an incentive to introduce a bundle discount when demand for the bundle is more elastic than the overall demand for products. When separate sellers coordinate on a bundle discount, they can use the discount to relax competition, which can harm welfare. (C) 2012 Elsevier Inc. All rights reserved.
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