The Economics and Antitrust of Bundling

Journal of Business, Entrepreneurship and the Law

22 Pages Posted: 30 May 2019 Last revised: 16 Jun 2020

Date Written: June 15, 2020

Abstract

This article explains the economics and antitrust of bundling. I first show that popular arguments such as demand complementarities, economies of scope, and price discrimination are not sufficient. I then detail potentially anticompetitive factors such as leverage and opacity. I then use simple examples to show how variation in consumer valuations explains bundling and is not anticompetitive. Finally, I explore other business judgment rule explanations for bundling.

Keywords: Pure and Mixed Bundles, Demand Complementarities, Economies of Scope, Price Discrimination, Tie-In, Correlation of Demand, Antitrust Litigation, Monopoly Power, Lerner Index, NCAA v. Board of Regents

JEL Classification: D21, D42, D43, L12, L13, L40, L41, L50

Suggested Citation

Bhattacharya, Rajeev, The Economics and Antitrust of Bundling (June 15, 2020). Journal of Business, Entrepreneurship and the Law, Available at SSRN: https://ssrn.com/abstract=3384230 or http://dx.doi.org/10.2139/ssrn.3384230

Rajeev Bhattacharya (Contact Author)

Washington Finance and Economics ( email )

United States

HOME PAGE: http://washington-finance.com

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