On the Private and Social Desirability of Mixed Bundling in Complementary Markets with Cost Savings

Quaderni - Working Paper DSE N° 1038

32 Pages Posted: 11 Nov 2015

See all articles by Christine Halmenschlager

Christine Halmenschlager

University of Paris II Pantheon-Assas - ERMES

Andrea Mantovani

University of Bologna

Multiple version iconThere are 2 versions of this paper

Date Written: November 10, 2015

Abstract

The aim of this paper is to study both the private and the social desirability of a mixed bundling strategy that generates a cost savings effect. We confirm that mixed bundling is the dominant strategy for multiproduct firms, although it may give rise to a prisoner’s dilemma.

Moreover, we show that mixed bundling may maximise social welfare, provided that cost savings are sufficiently high. Finally, we highlight the parametric regions where the social and the private interests coincide, and those where they do not. The recent evolution of broadband telecommunications services provides an ideal framework to apply our theoretical predictions.

Keywords: Mixed bundling, strategic interaction, broadband market, cost savings

JEL Classification: D43, L13, L41

Suggested Citation

Halmenschlager, Christine and Mantovani, Andrea, On the Private and Social Desirability of Mixed Bundling in Complementary Markets with Cost Savings (November 10, 2015). Quaderni - Working Paper DSE N° 1038. Available at SSRN: https://ssrn.com/abstract=2688923 or http://dx.doi.org/10.2139/ssrn.2688923

Christine Halmenschlager (Contact Author)

University of Paris II Pantheon-Assas - ERMES ( email )

12 Place du Panthéon
Paris, Cedex 5, 75005
France

Andrea Mantovani

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
22
Abstract Views
364
PlumX Metrics