Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87169
Authors: 
Hinloopen, Jeroen
Mueller, Wieland
Normann, Hans-Theo
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper 11-170/1
Abstract: 
ABSTRACT: We analyze the impact of product bundling in experimental markets. One firm has monopoly power in a first market but competes with another firm in a second market. We compare treatments where the multiproduct firm (i) always bundles, (ii) never bundles, and (iii) chooses whether or not to bundle. We also contrast the simultaneous and the sequential order of moves in the duopoly market. Our data indicate support for the theory of product bundling: with bundling and simultaneous moves, the multiproduct firm offers the predicted number of units. When the multiproduct firm is the Stackelberg leader, the predicted equilibrium is better attained with bundling, especially when it chooses to bundle, even though in theory bundling should not make a difference here. In sum, bundling works as a commitment device that enables the transfer of market power from one market to another.
Subjects: 
Cournot
commitment
experiments
product bundling
Stackelberg
JEL: 
C92
D43
L11
L12
L41
Document Type: 
Working Paper

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