MGCR 293 Lecture Notes - Lecture 16: Reservation Price, Demand Curve, Market Power
8 Nov 2016
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Separate selling: when a company sells each product separately. Pure (simple) bundling: when a company offers several products or services as one package so consumers do not have an option to purchase package components separately. Mixed bundling: allows consumers to purchase package components either as a single unit or separately (ex. Season tickets to sporting events or value meals at mcdonald"s) Bundling example: when film company leased movie abc it required theaters to also lease movie. Company must be able to increase revenue. We can see the reservation prices for each theater and movie: Renting the movies separately would result in each theater paying the lowest reservation price for each movie: If the movies are bundled: theater a will pay ,000 for both and b will pay ,000 for both. If each were charged the lower of the two prices, total revenue will be. The movie company will gain more revenue by bundling the movie.
