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Non-Linear Pricing with Homogeneous Customers and Limited Unbundling (Discussion Paper 2010-04)

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Sibly, H (2010) Non-Linear Pricing with Homogeneous Customers and Limited Unbundling (Discussion Paper 2010-04). Discussion Paper. School of Economics and Finance, University of Tasmania. (Unpublished)

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Abstract

This paper presents a model in which a firm conducts non-linear pricing though bundling. However some agents, ‘unbundlers’, find it profitable to unbundle output. Unbundlers have an increasing marginal cost of unbundling, which limits the extent of unbundling. Customers with identical demand can purchase either bundled or unbundled output. In equilibrium, some consumers purchase bundled output and others unbundled output. The analysis shows how the extent of unbundling and the optimal bundle size are related to the cost of unbundling. Failing to account for presence of unbundling could lead to a misinterpretation of market efficiency.

Item Type: Report (Discussion Paper)
Keywords: repec
Publisher: School of Economics and Finance, University of Tasmania
Additional Information: School of Economics and Finance - Discussion Paper 2010-04
Date Deposited: 29 Nov 2010 05:40
Last Modified: 18 Nov 2014 04:14
URI: http://eprints.utas.edu.au/id/eprint/10448
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