Bundling and the GE-Honeywell Merger

35 Pages Posted: 5 Sep 2002  

Barry J. Nalebuff

Yale University - Yale School of Management; Yale University - Cowles Foundation

Date Written: September 2002

Abstract

The economic theory of bundling has moved from the classroom and academic journals to the public policy arena. Its debut was dramatic. On July 3, 2001, the European Commission blocked the $42 billion merger between GE and Honeywell. A primary reason for their objection to this combination was a concern over bundling.

This paper uses the context of the proposed GE-Honeywell merger to address the concerns raised by bundling. We set out the theory as put forth by the Commission and try to reconcile this theory with both the economic theory of bundling and the facts of the case. We discuss what is meant by bundling and explain when it is a potential problem and when it is not. Based on this understanding, we propose anti-trust policy recommendations to deal with the novel issues raised by bundling.

Keywords: Bundling, Antitrust, EU, GE, Honeywell

JEL Classification: C7, D4, K0, L4

Suggested Citation

Nalebuff, Barry J., Bundling and the GE-Honeywell Merger (September 2002). Yale SOM Working Paper No. ES-22. Available at SSRN: https://ssrn.com/abstract=327380 or http://dx.doi.org/10.2139/ssrn.327380

Barry Nalebuff (Contact Author)

Yale University - Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-5968 (Phone)
203-432-6974 (Fax)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-5968 (Phone)

HOME PAGE: http://barrynalebuff.com

Paper statistics

Downloads
3,415
Rank
2,129
Abstract Views
14,150