Evaluating the Profitability of Product Bundling in the Context of Negotiations
I develop a model to evaluate the profitability of product bundling in the context of negotiations between a monopolist and intermediaries that sell its products to consumers. I investigate whether the monopolist finds it feasible and advantageous to utilize product bundling to block negotiations between the intermediaries and a rival firm, which competes against the monopolist in a complementary market. My model demonstrates that bundling can be affected by intermediate bargaining power. Specifically, while the example I consider supports the profitability of product bundling when the monopolist sells its product directly to consumers, the existence of negotiations with intermediaries may reverse this result.
Year of publication: |
2004
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Authors: | Gal-Or, Esther |
Published in: |
The Journal of Business. - University of Chicago Press. - Vol. 77.2004, 4, p. 639-674
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Publisher: |
University of Chicago Press |
Saved in:
Online Resource
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