Management and Organizational Studies 2275A/B Lecture 2: 2.E - Bundling (or, Bundled Pricing).docx
4 Mar 2015
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2:33 pm o o o o o o. The obvious answer for pure bundling is that the goods are complements. Reservation price: maximum price individual would pay for that product. Assume that no one wants more than one of either good. Res price (a and b) = res price a + res price b. Variation across buyers in reservation prices: jack is willing to pay more for a than for b, jill is willing to pay more for b than for a (text terminology: negatively correlated res prices) Depends on prices, but usually more profitable to sell both separately (you have to make less products and make more money) If negative correlation then bundling has the possibility for more profit. How does a change from separate pricing to pure bundled pricing change. Mixed bundling: o o purchased by those with values in each area? o o o p0" = pa + pb" Reinforces what we found in the other analysis:
