Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96925
Authors: 
Jeitschko, Thomas D.
Jung, Yeonjei
Kim, Jaesoo
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 144
Abstract: 
We study joint marketing arrangements by competing firms who engage in price discrimination between consumers who patronize only one firm (single purchasing) and those who purchase from both competitors (bundle purchasers). Two types of joint marketing are considered. Firms either commit to a component-price that applies to bundle-purchasers and then firms set stand-alone prices for single purchasers; or firms commit to a rebate off their stand alone price that will be applied to bundle-purchasers, and then firms set their stand alone prices. Both methods allow firms to raise prices and earn higher profits. However, the effect of price discrimination on social welfare depends on how prices are chosen. The rebate joint marketing scheme increases joint purchasing, whereas bundle pricing diminishes bundle purchases. If the marginal social value of a bundle over a single purchase is large, the former increases total welfare. However, welfare can also increase with bundle pricing compared to non-discriminatory pricing.
Subjects: 
Bundling
Joint Marketing
Price Discrimination
JEL: 
D4
D8
ISBN: 
978-3-86304-143-4
Document Type: 
Working Paper

Files in This Item:
File
Size
371.69 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.