The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Bundling and Tying

  • Barry Nalebuff
Reference work entry


Bundling can be thought of as akin to a volume discount, but one where the volume is based on aggregate sales across products. Instead of offering a discount for buying two apples rather than one, the customer is given a better price for buying an apple and an orange together. Bundling may be used to reduce cost and improve quality, and for price discrimination. While the Chicago School has argued that a monopolist cannot gain by bundling its monopoly good with a competitive product, recent work suggests that in a dynamic game bundling can help protect and leverage market power.


Antitrust policy Bundle discounting Bundling Chicago School Complementarities Consumer surplus Cournot, A. Envelope theorem Market power Markup Metering Mixed bundling One-monopoly profit argument Price discrimination Pure bundling Two-part tariffs Tying 

JEL Classifications

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Barry Nalebuff
    • 1
  1. 1.