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  4. September 2023
  5. A Characterization for Optimal Bundling of Products with Nonadditive Values

American Economic Review: Insights

ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)

A Characterization for Optimal Bundling of Products with Nonadditive Values

  • Soheil Ghili
American Economic Review: Insights
vol. 5, no. 3, September 2023
(pp. 311–26)
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Abstract

This paper studies the optimal bundling of products with nonadditive values. Under monotonic preferences and single-peaked profits, I show that a monopolist finds pure bundling optimal if and only if the optimal sales volume for the grand bundle is larger than the optimal sales volume for any smaller bundle. I then detail how my analysis relates to ratio monotonicity results on bundling and describe the implications for nonlinear pricing.

Citation

Ghili, Soheil. 2023. "A Characterization for Optimal Bundling of Products with Nonadditive Values." American Economic Review: Insights, 5 (3): 311–26. DOI: 10.1257/aeri.20220056

Additional Materials

JEL Classification

  • D21 Firm Behavior: Theory
  • D42 Market Structure, Pricing, and Design: Monopoly
  • L12 Monopoly; Monopolization Strategies
  • L25 Firm Performance: Size, Diversification, and Scope