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Optimal decisions in two-stage bundling

Dassiou, X. & Glycopantis, D. (2012). Optimal decisions in two-stage bundling. In: Recent Advances in the Analysis of Competition Policy and Regulation. (pp. 95-115). Edward Elgar Publishing Ltd.. doi: 10.4337/9781781005699.00011

Abstract

We develop a generalised framework for pure bundling where buyer tastes for two goods are assumed to follow a normal distribution. In the literature optimal bundling decisions have been considered under the assumption that the weights of the two goods are Öxed and equal. The only consideration is then to choose the proÖt maximising optimal price. Our approach is di§erent and much more realistic. The monopolist Örst decides on the optimal weights of the two goods and in the second stage derives the proÖt maximising bundle price. Welfare and policy implications of our approach are derived and comparisons are made with those of the Öxed weights approach.

Publication Type: Book Section
Additional Information: This chapter is for private use only
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Arts & Social Sciences > Economics
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