Ain’T it "Suite"? Bundling in the Pc Office Software Market

68 Pages Posted: 21 May 2018 Last revised: 25 Jun 2018

See all articles by Neil Gandal

Neil Gandal

Berglas School of Economics, Tel Aviv University; Centre for Economic Policy Research (CEPR)

Sarit Markovich

Kellogg School of Management

Michael H. Riordan

Columbia University - Columbia Business School

Date Written: October 2012

Abstract

We examine the importance of office suites for the evolution of the PC office software market in the 1990s. An estimated discrete demand choice model reveals a positive correlation of consumer values for spreadsheets and word processors, a bonus value for suites, and advantages for Microsoft products. We employ the estimates to simulate various hypothetical market structures to evaluate the profitability, welfare, and competitive effects of suites under alternative correlation assumptions.We find that there is a huge benefit to firms from bundling components (i.e., a spreadsheet and a wordprocessor) when the correlation of consumer preferences over the components in the bundle is positive. Our work adds another aspect to the recent work in the strategy literature that examines benefits from bundling when there are complementary relationships across the products in the bundle.

Keywords: Bundling, Office Productivity Software, Simulations

JEL Classification: D0, L1

Suggested Citation

Gandal, Neil and Markovich, Sarit and Riordan, Michael H., Ain’T it "Suite"? Bundling in the Pc Office Software Market (October 2012). CEPR Discussion Paper No. DP9181. Available at SSRN: https://ssrn.com/abstract=3182409

Neil Gandal (Contact Author)

Berglas School of Economics, Tel Aviv University ( email )

Tel Aviv University
Tel Aviv 69978
Israel
+972 3 640 9907 (Phone)
+972 3 640 9908 (Fax)

HOME PAGE: http://www.neilgandal.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sarit Markovich

Kellogg School of Management ( email )

2211 Campus Drive
Kellogg
Evanston, IL IL 60208
United States

Michael H. Riordan

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States
212-854-6984 (Phone)

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