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Premium Bundling

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  • Cready, William M

Abstract

This paper extends W. J. Adams and J. L. Yellen's (1976) well-known mixed-bundling pricing model by examining the case of sellers pricing bundles of goods or services at a premium relative to the prices charged on bundle components; that is, sellers price discriminate by charging more, rather than less, at the margin for bundles relative to components. The analysis demonstrates that sellers can, and perhaps do, employ premium bundling by the skillful use of cents-off coupons, rebates, or direct knowledge of their customers. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Cready, William M, 1991. "Premium Bundling," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 173-179, January.
    • Handle: RePEc:oup:ecinqu:v:29:y:1991:i:1:p:173-79
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    Cited by:

    1. Andrea Mantovani & Jan Vandekerckhove, 2016. "The Strategic Interplay Between Bundling and Merging in Complementary Markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 37(1), pages 19-36, January.
    2. Andrea Mantovani, 2013. "The Strategic Effect of Bundling: A New Perspective," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 25-43, February.
    3. Uri Ben-Zion & Aharon Hibshoosh & Uriel Spiegel, 2000. "Price Discrimination by Coupons Restriction," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(3), pages 325-331.

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