Bundling, entry deterrence, and specialist innovators

Jay Pil Choi, Christodoulos Stefanadis

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

We examine a mechanism by which bundling may inefficiently deter entry into the market. The model considers an incumbent monopolist in two complementary components that faces a series of entry attempts by rivals. It is shown that the incumbent can practice bundling to buttress its monopoly position by keeping specialist innovators out of the market. Bundling prevents specialist rivals from coordinating in the dynamic entry process, reducing the probability of an eventual displacement of the incumbent. The specialization decisions of rivals are also distorted. Bundling may lead to lower customer and total economic welfare.

Original languageEnglish
Pages (from-to)2575-2594
Number of pages20
JournalJournal of Business
Volume79
Issue number5
DOIs
Publication statusPublished - 2006 Sep 1

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Welfare
Specialization
Customers
Economics
Series
Market
Innovators
Entry deterrence
Bundling
Model
Incumbents
Monopolist
Monopoly
Economic welfare

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

Cite this

Choi, Jay Pil ; Stefanadis, Christodoulos. / Bundling, entry deterrence, and specialist innovators. In: Journal of Business. 2006 ; Vol. 79, No. 5. pp. 2575-2594.
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Bundling, entry deterrence, and specialist innovators. / Choi, Jay Pil; Stefanadis, Christodoulos.

In: Journal of Business, Vol. 79, No. 5, 01.09.2006, p. 2575-2594.

Research output: Contribution to journalArticle

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