Exclusionary Bundle Discounts: A Simple Model with two Applications

Heller, C.-Philipp; Lindenlaub, Heiner; Maier-Rigaud, Frank P.

doi:10.2139/ssrn.3285887

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Exclusionary Bundle Discounts: A Simple Model with two Applications

C.-Philipp Heller, Heiner Lindenlaub and Frank Maier-Rigaud (2020) Exclusionary Bundle Discounts: A Simple Model with two Applications, Economics Bulletin, 40(1), 210-216.

6 Pages Posted: 10 Dec 2018 Last revised: 6 Feb 2020

See all articles by C.-Philipp Heller

Frank P. Maier-Rigaud

IESEG School of Management (LEM-CNRS), Department of Economics and Quantitative Methods; ABC economics

Date Written: April 16, 2019

Abstract

We develop a simple theoretical model of exclusionary bundle discounts. Based on the model, we develop a screening test for exclusionary bundle discounts. This test only requires knowledge of prices and an estimate of the coverage of the bundle discount. We apply this test to the Vodafone/Liberty Global merger in Germany and find bundle discounts in the German broadband Internet access market consistent with exclusion. We finally use the model to simulate the merger’s price effects.

Keywords: Exclusionary Pricing, Bundling, Mergers

JEL Classification: L12, L41, L96

Suggested Citation: Suggested Citation

Heller, C.-Philipp and Lindenlaub, Heiner and Maier-Rigaud, Frank P., Exclusionary Bundle Discounts: A Simple Model with two Applications (April 16, 2019). C.-Philipp Heller, Heiner Lindenlaub and Frank Maier-Rigaud (2020) Exclusionary Bundle Discounts: A Simple Model with two Applications, Economics Bulletin, 40(1), 210-216., Available at SSRN: https://ssrn.com/abstract=3285887 or http://dx.doi.org/10.2139/ssrn.3285887