Economics
Anil Caliskan, David Porter, Stephen Rassenti, Vernon L. Smith, Bart J. Wilson
Exclusionary Bundling and the Effects of a Competitive Fringe
Volume 163 (2007) / Issue 1, pp. 109-132 (24)
The traditional analysis of exclusionary bundling examines the impact of a monopolist bundling product A with another product B, which is competitively provided. Using experimental posted-offer markets, we investigate the exclusionary and welfare implications of having a fringe competitor in the A market. We find that the fringe seller increases the consumer surplus while decreasing the seller surplus and that the fringe seller does not affect the consumer surplus extracted from the bundle despite a decrease in the bundle transaction price. The consumer surplus gains generated by the fringe seller erode if the dominant seller has a lower average cost.