Bundling With Quality Choice - IDEAS/RePEc

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IDEAS home Printed from https://ideas.repec.org/a/hit/hitjec/v55y2014i2p147-165.html My bibliography Save this article Bundling With Quality Choice
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Author

Listed:
  • CHUNG, HUI-LING
  • CHEN, HUNG-YI
  • HU, JIN-LI
  • LIN, YAN-SHU
Registered:
  • Jin-Li Hu

Abstract

Antitrust authorities consider commodity bundling as an extension of monopoly power to other markets which harms consumers. This paper analyzes quality competition and its effect on consumer surplus for the case of commodity bundling by a multi-product firm in a vertically differentiated industry. When the firm bundles a high quality good, we show that bundling negatively affects the quality of a competing good, consumer surplus, and welfare. When the firm bundles a low quality good instead, bundling raises the quality of a competing good, enhances consumer surplus, and may increase the welfare.

Suggested Citation

  • Chung, Hui-Ling & Chen, Hung-Yi & Hu, Jin-Li & Lin, Yan-Shu, 2014. "Bundling With Quality Choice," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 55(2), pages 147-165, December.
  • Handle: RePEc:hit:hitjec:v:55:y:2014:i:2:p:147-165 DOI: 10.15057/26969 as HTML HTML with abstract plain text plain text with abstract BibTeX RIS (EndNote, RefMan, ProCite) ReDIF JSON

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