Chapter 14-Monopoly Bundling/Tying Formal analysis of monopoly bundling(cont'd e Lesson: If consumers have heterogeneous but uncorrelated valuations for 2 products, then the monopolist t its profits under pure bundling compared to separate selling It T its demand by selling the bundle cheaper than the combined price under separate selling Lesson: Mixed bundling allows the monopolist to increase its profits even further than pure bundling Here bundle is more expensive than under pure bundling and individual components are more expensive than under separate selling Mixed tying may yield strictly higher profit levels than pure tying and no tying. But NOT always e Wen Cao© Wen Cao 7 Formal analysis of monopoly bundling (cont’d) Chapter 14 - Monopoly Bundling/Tying • Lesson: If consumers have heterogeneous but uncorrelated valuations for 2 products, then the monopolist  its profits under pure bundling compared to separate selling. It  its demand by selling the bundle cheaper than the combined price under separate selling. • Lesson: If consumers have heterogeneous but uncorrelated valuations for 2 products, then the monopolist  its profits under pure bundling compared to separate selling. It  its demand by selling the bundle cheaper than the combined price under separate selling. • Lesson: Mixed bundling allows the monopolist to increase its profits even further than pure bundling. Here, bundle is more expensive than under pure bundling and individual components are more expensive than under separate selling. • Lesson: Mixed bundling allows the monopolist to increase its profits even further than pure bundling. Here, bundle is more expensive than under pure bundling and individual components are more expensive than under separate selling. Mixed tying may yield strictly higher profit levels than pure tying and no tying. But NOT always