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| Author: | Matutes, C. Regibeau, P. |
| Title: | Compatibility and bundling of complementary goods in a duopoly |
| Journal: | Journal of Industrial Economics
1992 : MAR, VOL. 40:1, p.37-54 |
| Index terms: | MARKET STRUCTURE STANDARDS MONOPOLY PURCHASING OLIGOPOLY |
| Language: | eng |
| Abstract: | A simple model is presented which describes compatibility and bundling in industries where consumers assemble several necessary components into a system that is close to their ideal. It is shown that, for a wide range of parameters, firms will choose to produce compatible components but will offer discounts to consumers who purchase all components from the same firm. However, firms would be better off it they could commit not to provide such discounts. Furthermore, the equilibrium tends to involve socially excessive bundling. Finally, mixed bundling strategies tend to increase the range of parameters over which socially excessive standardization occurs. This model extends the basic framework of monopoly bundling to a duopoly setting. |
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