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

IEB Working Paper N. 2016/06

38 Pages Posted: 12 Mar 2016

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: March 9, 2016

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: Regulation, firm performance, telecommunications, multinational firms

JEL Classification: L51, L25, L96, F23

Suggested Citation

Halmenschlager, Christine and Mantovani, Andrea, On the Private and Social Desirability of Mixed Bundling in Complementary Markets with Cost Savings (March 9, 2016). IEB Working Paper N. 2016/06. Available at SSRN: https://ssrn.com/abstract=2745966 or http://dx.doi.org/10.2139/ssrn.2745966

Christine Halmenschlager

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

12 Place du Panthéon
Paris, Cedex 5, 75005
France

Andrea Mantovani (Contact Author)

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

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