Intertemporal Mixed Bundling and Buying Frenzies

Posted: 16 Nov 1999

See all articles by Patrick DeGraba

Patrick DeGraba

Federal Trade Commission - Antitrust I

Rafi Mohammed

The Monitor Company

Abstract

By initially selling goods only in bundles and subsequently selling unsold units individually, a multiproduct seller can create a buying frenzy in which his profit is higher than it would be if he sold all units individually at their market clearing prices. In this frenzy, high-valuation customers buy a bundle because they expect quantity rationing when units are sold individually. Their purchases reduce the quantity to be sold individually, causing the shortages that result in rationing. The bundle's price exceeds the sum of the individual prices, a fact observed in markets for rock concert tickets.

JEL Classification: D43

Suggested Citation

DeGraba, Patrick and Mohammed, Rafi, Intertemporal Mixed Bundling and Buying Frenzies. Rand Journal Of Economics, Vol. 30, Issue 4. Available at SSRN: https://ssrn.com/abstract=182350

Patrick DeGraba (Contact Author)

Federal Trade Commission - Antitrust I ( email )

600 Pennsylvania Avenue, NW
Rm. 4249
Washington, DC 20580
United States
202-326-2855 (Phone)
202-326-3443 (Fax)

Rafi Mohammed

The Monitor Company ( email )

Two Canal Park
Cambridge, MA 02141
United States

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