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When Is Pure Bundling Optimal?
[Commodity Bundling and the Burden of Monopoly]

Author

Listed:
  • Nima Haghpanah
  • Jason Hartline

Abstract

We study when pure bundling, i.e., offering only the grand bundle of all products, is optimal for a multi-product monopolist. Pure bundling is optimal if consumers with higher values for the grand bundle have higher relative values for smaller bundles compared to the grand bundle. Conversely, pure bundling is not optimal if consumers with higher values for the grand bundle have lower relative values. We prove the results by decomposing the problem into simpler ones in which types can be ranked according to their values for the grand bundle.

Suggested Citation

  • Nima Haghpanah & Jason Hartline, 2021. "When Is Pure Bundling Optimal? [Commodity Bundling and the Burden of Monopoly]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1127-1156.
    • Handle: RePEc:oup:restud:v:88:y:2021:i:3:p:1127-1156.
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    File URL: http://hdl.handle.net/10.1093/restud/rdaa053
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    Citations

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    Cited by:

    1. Saeed Alaei & Ali Makhdoumi & Azarakhsh Malekian & Saša Pekeč, 2022. "Revenue-Sharing Allocation Strategies for Two-Sided Media Platforms: Pro-Rata vs. User-Centric," Management Science, INFORMS, vol. 68(12), pages 8699-8721, December.
    2. Bikhchandani, Sushil & Mishra, Debasis, 2022. "Selling two identical objects," Journal of Economic Theory, Elsevier, vol. 200(C).
    3. Nicholas C Bedard & Jacob K Goeree & Ningyi Sun, 2023. "Multivariate Majorization in Principal-Agents Models," Papers 2308.13804, arXiv.org.
    4. Ostrizek, Franz & Sartori, Elia, 2023. "Screening while controlling an externality," Games and Economic Behavior, Elsevier, vol. 139(C), pages 26-55.
    5. Dirk Bergemann & Yang Cai & Grigoris Velegkas & Mingfei Zhao, 2022. "Is Selling Complete Information (Approximately) Optimal?," Cowles Foundation Discussion Papers 2324, Cowles Foundation for Research in Economics, Yale University.
    6. Alireza Fallah & Michael I. Jordan & Ali Makhdoumi & Azarakhsh Malekian, 2024. "The Limits of Price Discrimination Under Privacy Constraints," Papers 2402.08223, arXiv.org, revised Jun 2024.
    7. Soheil Ghili & Russ Yoon, 2023. "An Empirical Analysis of Optimal Nonlinear Pricing in Business-to-Business Markets," Papers 2302.11643, arXiv.org, revised Aug 2024.
    8. Frank Yang, 2021. "Costly Multidimensional Screening," Papers 2109.00487, arXiv.org, revised Aug 2022.
    9. Alexander V. Kolesnikov & Fedor Sandomirskiy & Aleh Tsyvinski & Alexander P. Zimin, 2022. "Beckmann's approach to multi-item multi-bidder auctions," Papers 2203.06837, arXiv.org, revised Sep 2022.
    10. Andreas Kleiner, 2022. "Optimal Delegation in a Multidimensional World," Papers 2208.11835, arXiv.org.

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