A Characterization for Optimal Bundling of Products with Nonadditive Values
AbstractThis paper studies the optimal bundling of products with nonadditive values. Under monotonic preferences and single-peaked profits, I show that a monopolist finds pure bundling optimal if and only if the optimal sales volume for the grand bundle is larger than the optimal sales volume for any smaller bundle. I then detail how my analysis relates to ratio monotonicity results on bundling and describe the implications for nonlinear pricing.
CitationGhili, Soheil. 2023. "A Characterization for Optimal Bundling of Products with Nonadditive Values." American Economic Review: Insights, 5 (3): 311-26. DOI: 10.1257/aeri.20220056
- D21 Firm Behavior: Theory
- D42 Market Structure, Pricing, and Design: Monopoly
- L12 Monopoly; Monopolization Strategies
- L25 Firm Performance: Size, Diversification, and Scope