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Chen, Yongmin; Riordan, Michael H.

Profitability of product bundling. (English) Zbl 1420.91087

Int. Econ. Rev. 54, No. 1, 35-57 (2013).
Summary: Using copulas to model the stochastic dependence of values, this article establishes new general conditions for the profitability of product bundling. A multiproduct monopolist generally achieves higher profit from mixed bundling than from separate selling if consumer values for two of its products are negatively dependent, are independent, or have sufficiently limited positive dependence. The profitability of monopoly bundling also extends to situations where a multiproduct firm competes with a single-product rival.

Cited in 7 Documents

MSC:

91B24 Microeconomic theory (price theory and economic markets)

Keywords:

multiproduct monopolist; product bundling
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References:

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