Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 253: Bundled Sales as Self-Selection Devise

Klaus Wallner
Additional contact information
Klaus Wallner: SITE - Stockholm Institute of Transition Economics and East European Economies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: This paper develops an adverse selection model of mixed bundling. By packaging its product with a competitively produced good unrelated in demand, a monopolist can induce self-selection of different types of consumers into buyers of the bundle and of the separate components. Private and social optimality conditions of bundling are derived. The effect on prices and welfare depends on the demand elasticities for the bundled and unbundled good. By overcoming information asymmetries, bundling may raise welfare if it leads to a sufficiently strong expansion of the market. It is possible that prices to all buyers rise; in this case welfare definitely falls if the bundle is introduced.

Keywords: Commodity bundling; price discrimination.

JEL-codes: D42; L12; L42

25 pages, August 17, 1998

Full text files PDF-file Full text
hastef0253.pdf PDF-file Full text PostScript file Full text PostScript file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-03-27 10:24:44.