Where does bundling collide?

The practice of a seller offering two or more distinct products together as a single package, often at a combined price, as a way to extract more of what buyers are willing to pay. Adams and Yellen's 1976 Commodity Bundling and the Burden of Monopoly showed how a monopolist can raise profit by mixing products whose buyers value them differently, distinguishing pure bundling, where only the package is sold, from mixed bundling, where the package and its parts are both on offer. The referent here is a pricing and packaging strategy chosen to sort customers by willingness to pay, not a legal charge against a firm, a way of joining data links, or a courtship custom.[1]

Unit

One package offer combining two or more products at a set price

Recovery means

Not applicable

Measured by

Analysed through demand and reservation prices, and compared against separate selling by the profit and consumer surplus each option yields

In competition law, bundling names a firm's conduct, closely tied to the doctrine of tying, in which access to one product is linked to the purchase of another or is rewarded through discounts that apply only across the package, and which may be challenged as a way to shut rivals out of a market. Elhauge's 2009 Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory argued that such conduct can harm competition and rejected the older view that a firm with one monopoly gains nothing by extending it. The referent here is a category of potentially unlawful behaviour judged for its effect on rivals, not the mere pricing strategy an economist models, a network technique, or a social ritual.[2]

Unit

One course of conduct linking products, judged against competition law

Recovery means

Not applicable

Measured by

Assessed in litigation by market power, foreclosure of rivals, and whether the linkage lacks a legitimate business justification