Working paper

Bundling and Competition for Slots: On the Portfolio Effects of Bundling

Doh-Shin Jeon, and Domenico Menicucci

Abstract

We consider competition among sellers when each of them sells a portfolio of distinct products to a buyer having limited slots. We study how bundling affects competition for slots. Under independent pricing, equilibrium often does not exist and hence the outcome is often inefficient. When bundling is allowed, each seller has an incentive to bundle his products and an efficient equilibrium always exists. Furthermore, in the case of digital goods, all equilibria are efficient if slotting contracts are prohibited. We also identify portfolio effects of bundling and analyze the consequences on horizontal mergers. Finally, we derive clear-cut policy implications.

JEL codes

  • D4: Market Structure and Pricing
  • K21: Antitrust Law
  • L13: Oligopoly and Other Imperfect Markets
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • L82: Entertainment • Media

Replaced by

Doh-Shin Jeon, and Domenico Menicucci, Bundling and Competition for Slots, American Economic Review, vol. 102, n. 5, August 2012, pp. 1957–1985.

See also

Published in

TSE Working Paper, n. 09-069, July 27, 2009, revised July 2011