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On the Relationship between Spillovers and Bundling
Author(s) -
Plotnikova Maria,
Sarangi Sudipta,
Swaminathan Sushmita
Publication year - 2016
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12091
Subject(s) - stylized fact , economics , spillover effect , bundle , welfare , product (mathematics) , industrial organization , microeconomics , macroeconomics , market economy , materials science , geometry , mathematics , composite material
This paper examines the relationship between the bundling decision of a large firm and the impact of spillovers from smaller firms drawing on stylized facts from the software industry. We find that bundling occurs only in the presence of significant spillovers from the two smaller firms. The large firm does not bundle when there are spillovers for only one product. Finally, we show that welfare is higher under bundling.