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Nima Haghpanah, Jason Hartline, When Is Pure Bundling Optimal?, The Review of Economic Studies, Volume 88, Issue 3, May 2021, Pages 1127–1156, https://doi.org/10.1093/restud/rdaa053
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Abstract
We study when pure bundling, i.e., offering only the grand bundle of all products, is optimal for a multi-product monopolist. Pure bundling is optimal if consumers with higher values for the grand bundle have higher relative values for smaller bundles compared to the grand bundle. Conversely, pure bundling is not optimal if consumers with higher values for the grand bundle have lower relative values. We prove the results by decomposing the problem into simpler ones in which types can be ranked according to their values for the grand bundle.
© The Author(s) 2020. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
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