Discussion Paper Details

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Title: Pricing a Package of Services

Author(s): Felix Ketelaar and Dezso Szalay

Publication Date: December 2014

Keyword(s): Bundling, Monopoly, Multidimensional screening and Price discrimination

Programme Area(s): Industrial Organization

Abstract: We study a tractable two-dimensional model of price discrimination. Consumers combine a rigid with a more flexible choice, such as choosing the location of a house and its quality or size. We show that the optimal pricing scheme involves no bundling if consumer types are affiliated. Conversely, if consumer types are negatively affiliated over some portion of types then some bundling occurs.

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Bibliographic Reference

Ketelaar, F and Szalay, D. 2014. 'Pricing a Package of Services'. London, Centre for Economic Policy Research.