Bundling with Customer Self-Selection: A Simple Approach to Bundling Low-Marginal-Cost Goods

Bundling with Customer Self-Selection: A Simple Approach to Bundling Low Marginal Cost Goods On-Line Appendix

Optimal Customized Bundle Pricing for Information Goods

In this paper, we provide a model for choosing the optimal number of bundles and their prices in the context of designing markets for information goods. Selling bundled goods is a widespread phenomenon, and a recent paper by Bakos and Brynjolfsson (1999) showed that under conditions of zero marginal cost, and independent and identically distributed customer valuations, pure bundling is optimal ...

The Role of Cost in Determining When Firms Offer Bundles

We incorporate marginal cost savings from bundling, fixed costs of product offerings, and variation in customer preferences into a model of bundling and tying. To focus on cost effects, we assume perfectly contestable markets and analyze sustainable product offerings. Pure bundling can arise either because few people demand only one component or because, with high fixed costs, a single product ...

Pricing strategies for information goods

Digital or information goods are becoming the norm across a wide variety of industries including books, music, entertainment, gaming and education. Due to the fact that the marginal cost of producing or reproducing information goods is very low, it is much easier to customise and personalise them for individual users. Furthermore, sellers of these information goods are increasingly using bundli...

Bundling and Competition on the Internet

The Internet has significantly reduced the marginal cost of producing and distributing digital information goods. It also coincides with the emergence of new competitive strategies such as large-scale bundling. In this paper, we show that bundling can create “economies of aggregation” for information goods if their marginal costs are very low, even in the absence of network externalities or eco...