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Jeon, Doh-Shin, and
Domenico Menicucci. 2012. "Bundling and Competition for Slots."
,
102(5): 1957-85.
Show Article Details
DOI: 10.1257/aer.102.5.1957
Abstract:We consider competition between sellers selling multiple distinct products to a buyer having k slots. Under independent pricing, a pure strategy equilibrium often does not exist, and equilibrium in
mixed strategy is never efficient. When bundling is allowed, each seller has an incentive to bundle his products, and an efficient "technology-renting" equilibrium always exists. Furthermore, in the case of digital goods or when sales below marginal cost are banned, all equilibria are efficient. Comparing the mixed-strategy equilibrium with the technology-renting equilibrium reveals that bundling often increases the buyer's surplus. Finally, we derive clear-cut policy implications.(JEL D43, D86, K21, L13, L14, L41, L82)
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Authors:
Jeon, Doh-Shin (Toulouse School of Economics and U Toulouse I, Capitole)
Menicucci, Domenico (U Florence)
JEL Classifications:
D43: Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
D86: Economics of Contract: Theory
K21: Antitrust Law
L13: Oligopoly and Other Imperfect Markets
L14: Transactional Relationships; Contracts and Reputation; Networks
L41: Monopolization; Horizontal Anticompetitive Practices
L82: Entertainment; Media
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