Bundle-Size Pricing as an Approximation to Mixed Bundling

S-Tier
Journal: American Economic Review
Year: 2011
Volume: 101
Issue: 1
Pages: 263-303

Authors (3)

Chenghuan Sean Chu (not in RePEc) Phillip Leslie (University of California-Los A...) Alan Sorensen (not in RePEc)

Score contribution per author:

2.681 = (α=2.01 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Multiproduct firms can set separate prices for all possible bundled combinations of its products "mixed bundling"). However, this is impractical for firms with more than a few products, because the number of prices increases exponentially with the number of products. We find that simple pricing strategies are often nearly optimal. Specifically, we show that bundle-size pricing--setting prices that depend only on the size of bundle purchased--tends to be more profitable than offering the individual products priced separately and tends to closely approximate the profits from mixed bundling. (JEL D24, D42, L11, L13, L25)

Technical Details

RePEc Handle
repec:aea:aecrev:v:101:y:2011:i:1:p:263-303
Journal Field
General
Author Count
3
Added to Database
2026-01-25