Stochastic Bundling with and without a Secondary Market

In this paper we consider the strategy of stochastic bundling, which we define as a selling strategy in which firms guarantee a consumer will receive a good, but do not guarantee which one it will be. First we derive a new condition that ensures the optimality of stochastic bundling when there is no secondary market. Then we graphically consider the conditions under which stochastic bundling may be optimal when there is a secondary market. Next we derive a sufficient condition for the global superiority of stochastic bundling when demands are linear. Finally, we find a local condition for the optimality of stochastic bundling with linear demands and conclude that because it is a local condition, this result generalizes to other cases