Abstract
Mixed bundling (MB), in which products are sold separately and as a bundle, is a form of second degree price discrimination. In this study we examine how MB and its variants compare against reserved product pricing (RPP), a form of co-promotion. Used by Amazon.com, among others, RPP consists of the firm offering individual products and then enticing single product buyers with a discount on the second product. Our analytical model has a monopolist offering two products to a mix of myopic and strategic consumers. We find that as long as the market consists of a “modest” fraction of myopic consumers, RPP is more profitable than mixed bundling and its special cases. We also present pricing results under RPP. An extension shows that RPP can also be more profitable than a form of price skimming. Limitations and future research directions are discussed.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
