Abstract
Sellers sometimes offer goods for sale under both a regular price and a discount for group purchase if the consumer group reaches some minimum size. This selling practice, which we term interpersonal bundling, is analyzed in a general framework of product bundling. We characterize the optimal prices and bundle size by a monopoly seller, and explain why interpersonal bundling is a profitable strategy in response to demand uncertainty. We also discuss other strategic considerations in formulating this selling strategy. Our analysis provides sufficient conditions for interpersonal bundling to dominate separate selling, and offers insights on how to enhance its profit advantage.
Original language | English |
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Publication status | Published - 22 Jun 2014 |
Event | 2014 Asian Meeting of the Econometric Society - Academia Sinica, Taipei, Taiwan, Province of China Duration: 20 Jun 2014 → 22 Jun 2014 http://www.econ.sinica.edu.tw/AMES2014.html |
Conference
Conference | 2014 Asian Meeting of the Econometric Society |
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Country/Territory | Taiwan, Province of China |
City | Taipei |
Period | 20/06/14 → 22/06/14 |
Internet address |
Keywords
- Interpersonal bundling
- bundling
- group purchase
- group discount
- demand uncertainty