We study bundling by a dominant multi-product rm facing competition from a rival multi-product rm. Compared to competition under independent pricing, competition under pure bundling reduces (increases) each rm's prot for low (high) levels of dominance, while for intermediate levels of dominance, it increases the dominant rm's prot but reduces the rival's prot. The latter result provides a justication for the use of contractual bundling to build entry barrier. When we allow for mixed bundling, we nd a threshold level of dominance above which the unique outcome is the one under pure bundling.
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L41: Monopolization • Horizontal Anticompetitive Practices