Abstract

http://ssrn.com/abstract=1069421
 
 

References (20)



 
 

Citations (2)



 


 



Bundles of Joy: The Ubiquity and Efficiency of Bundles in New Technology Markets


Stan J. Liebowitz


University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Stephen E. Margolis


North Carolina State University - Department of Economics

December 2007


Abstract:     
This paper examines the economic logic underlying bundles and tie-in sales and uses the lessons learned from that examination to analyze seven specific instances of bundling that have been the subject of antitrust scrutiny or other policy initiatives. We are particularly interested in products that are non-rivalrous in consumption, making all-you-can-eat pricing a viable candidate for efficiency. Our main economic points are the following: A la carte pricing may populate economic models but most products are bundles; they are bundles because bundles are generally more efficient. Tie-in sales are much less common and, we believe, not properly understood in textbook discussions. Market foreclosure, the principal efficiency concern with tying and bundling, is likely to be exceedingly rare. The seven instances of bundling (ties) examined are: cable television; patent pools; blanket licenses; iPods and iTunes; telephones; music albums and songs; and operating systems and component programs.

Number of Pages in PDF File: 44

Keywords: bundles, tie-in sales, antitrust, bundling, foreclosure, cable television

JEL Classification: K21, l4, l12, l5, l6, l96, O3

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Date posted: December 11, 2007  

Suggested Citation

Liebowitz, Stan J. and Margolis, Stephen E., Bundles of Joy: The Ubiquity and Efficiency of Bundles in New Technology Markets (December 2007). Available at SSRN: http://ssrn.com/abstract=1069421 or http://dx.doi.org/10.2139/ssrn.1069421

Contact Information

Stan J. Liebowitz (Contact Author)
University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )
800 W Campbell Road
Mail Station SM 31
Richardson, TX 75080
United States
972-883-2807 (Phone)
972-883-2818 (Fax)
HOME PAGE: http://www.utdallas.edu/~liebowit/
Stephen E. Margolis
North Carolina State University - Department of Economics ( email )
Raleigh, NC 27695-8110
United States
919-513-2565 (Phone)
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