Mixed Bundling in Oligopoly Markets

This paper provides a framework for studying competitive mixed bundling with an arbitrary number of firms. We examine both a firm's incentive to introduce mixed bundling and equilibrium tariffs when all firms adopt the mixed-bundling strategy. We develop a method to derive the equilibrium prices, and also offer a simple approximation of the equilibrium prices when the number of firms is large. In the duopoly case, relative to separate sales, mixed bundling has ambiguous impacts on prices, profit and consumer surplus. While with many firms mixed bundling lowers all prices, harms firms and benefits consumers under a mild condition