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Bundling without Price Discrimination

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  • Carvajal, Andres
  • Rostek, Marzena
  • Weretka, Marek

Abstract

This paper examines the optimal bundling strategies of a multiproduct monopoly in markets in which a seller cannot monitor and thereby restrict the purchases of buyers to a single bundle, while buyers have resale opportunities. In such markets, the standard mechanism through which bundling increases seller profits, based on price discrimination, is not feasible. The profit-maximizing bundling strategy is characterized, given the restrictions on pricing policies resulting from resale and a lack of monitoring. The welfare implications of optimal bundling are analyzed.

Suggested Citation

  • Carvajal, Andres & Rostek, Marzena & Weretka, Marek, 2010. "Bundling without Price Discrimination," Economic Research Papers 271001, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:271001
    DOI: 10.22004/ag.econ.271001
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    References listed on IDEAS

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    1. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521871525, October.
    2. Weil, Philippe, 1992. "Equilibrium asset prices with undiversifiable labor income risk," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 769-790.
    3. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521692083, October.
    4. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
    5. Jehiel, Philippe & Meyer-ter-Vehn, Moritz & Moldovanu, Benny, 2007. "Mixed bundling auctions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 494-512, May.
    6. Manelli, Alejandro M. & Vincent, Daniel R., 2006. "Bundling as an optimal selling mechanism for a multiple-good monopolist," Journal of Economic Theory, Elsevier, vol. 127(1), pages 1-35, March.
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    Cited by:

    1. Carvajal, Andrés & Rostek, Marzena & Sublet, Guillaume, 2018. "Information design and capital formation," Journal of Economic Theory, Elsevier, vol. 176(C), pages 255-292.

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    More about this item

    Keywords

    Financial Economics;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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