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
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: Suggested Citation