Bundled discounts: Strategic substitutes or complements?

Research output: Contribution to journalArticle

1 Citation (Scopus)
6 Downloads (Pure)

Abstract

Abstract Bundled discounts by pairs of otherwise independent firms play an increasingly important role as a strategic tool in several industries. Given that prices of firms competing for the same consumers are strategic complements, one would expect their discounts levels also to be strategic complements. However, in this paper we show that under some circumstances bundled discounts may be strategic substitutes. This occurs under vertically differentiated products where a low quality pair of producers may indeed prefer to lower its discount after an increase in the discount offered by a high quality pair of producers.
Original languageEnglish
Pages (from-to)278 - 282
JournalEconomics Letters
Volume124
Issue number2
DOIs
Publication statusPublished - Aug 2014

Keywords

  • Bilateral bundling
  • Bundled discounts
  • Strategic substitutes

Fingerprint Dive into the research topics of 'Bundled discounts: Strategic substitutes or complements?'. Together they form a unique fingerprint.

Cite this