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Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products

Publication ,  Journal Article
Venkatesh, R; Kamakura, W
Published in: Journal of Business
April 1, 2003

We develop an analytical model of contingent valuations and address two questions of import to a monopolist: (i) should a given pair of complements or substitutes be sold separately (pure components), together (pure bundling), or both (mixed bundling), and at what prices? (ii) How do optimal bundling and pricing strategies for complements and substitutes differ from those for independently valued products? We find that the combination of marginal cost levels and the degree of complementarity or substitutability determines which of the three bundling strategies is optimal. Complements and substitutes should typically be priced higher than independently valued products.

Published In

Journal of Business

DOI

ISSN

0021-9398

Publication Date

April 1, 2003

Volume

76

Issue

2

Start / End Page

211 / 231

Related Subject Headings

  • Finance
 

Citation

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Venkatesh, R., & Kamakura, W. (2003). Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products. Journal of Business, 76(2), 211–231. https://doi.org/10.1086/367748
Venkatesh, R., and W. Kamakura. “Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products.” Journal of Business 76, no. 2 (April 1, 2003): 211–31. https://doi.org/10.1086/367748.
Venkatesh, R., and W. Kamakura. “Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products.” Journal of Business, vol. 76, no. 2, Apr. 2003, pp. 211–31. Scopus, doi:10.1086/367748.

Published In

Journal of Business

DOI

ISSN

0021-9398

Publication Date

April 1, 2003

Volume

76

Issue

2

Start / End Page

211 / 231

Related Subject Headings

  • Finance