BIOC 212 Chapter Notes - Chapter 10: Vertical Integration, Transfer Pricing, Marginal Cost
17 Aug 2018
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Bundling allows rms to increase their pro t by charging different prices to different consumers based on the consumers" willingness to pay (or reservation price) Pure bundling = only package deal is offered (a cable company sells a bundle of internet, phone and television for a single price, no service separately) Mixed bundling = goods are available as a package or separately. Separate pricing: the seller offers its products separately, at prices p1 and p2 respectively. Pure bundling: the seller offers good 1 and good 2 as a bundle at price pb. Mixed bundling: the seller offers its products both separately and as a bundle at p&,p , and. Consumer surplus = reservation price market price. Csi = ri pi, where i = goods 1, 2, and bundle. Case 1: separate pricing: there are 2 conditions for the consumers to make a decision to buy, product 1 (cs1 = r1 p1):
