English, Article, Journal or magazine article edition: Exclusionary Bundling: The Motive for Mergers Sue Mialon

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Bookmark: http://trove.nla.gov.au/version/3928
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Exclusionary Bundling: The Motive for Mergers
Author
  • Sue Mialon
Physical Description
  • preprint
Notes
  • This paper models how exclusionary bundling motivates mergers. Firms in two unrelated markets may want to merge only to bundle, even though bundling is possible without a merger. This is because merger is necessary in order to use bundling for an exclusionary purpose. Independently of a merger, firms can always improve their profits from pure bundling. In contrast, a merger is never profitable if not combined with bundling. Moreover, it is more profitable to bundle through strategic alliance than through merger in the short run. Thus, firms choose to merge only if the merger can lead to foreclosure. Although the merger results in losses to a rival in only one of the two markets, foreclosure occurs in both markets, since the other rival firm alone cannot compete against a bundle. In this framework, all mergers are ex ante anti-competitive. Blocking a merger is never welfare-reducing.
  • RePEc:emo:wp2003:0907
Language
  • English
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