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On the Profitability of Interfirm Bundling in Oligopolies

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Listed:
  • Sang-Hyun Kim

    (Yonsei University)

  • Jong-Hee Hahn

    (Yonsei University)

Abstract

This paper examines the pro?tability of bundling or exclusive dealing among independent ?rms selling di¢´erentiated products. We show that, compared with separate sales, inter?rm bundling generally raises prices and is more pro?table provided the distribution of consumer valuations for products are sufficiently sym- metric and centered in the middle. Hence the firms have mutual incentives to o¢´er their products as a bundle or make exclusive dealing arrangements. We shed new light on the role of bundling in relaxing competition in oligopoly, the importance of which has been neglected in the previous literatures.

Suggested Citation

  • Sang-Hyun Kim & Jong-Hee Hahn, 2017. "On the Profitability of Interfirm Bundling in Oligopolies," Working papers 2017rwp-114, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2017rwp-114
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    References listed on IDEAS

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    Cited by:

    1. Leontiou, Anastasia & Ziros, Nicholas, 2024. "“Tacit bundling” among rivals: Limited-availability bargains for loss-averse consumers," European Economic Review, Elsevier, vol. 165(C).

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    More about this item

    Keywords

    interfirm bundling; (in)compatibility; exclusive dealing; antitrust;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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