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A General Equilibrium Model with Impersonal Networking Decisions and Bundling Sales

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journal contribution
posted on 05.06.2017, 05:59 by Li, Ke, Yang, Xiaokai
This paper develops a general equilibrium model of impersonal networking decisions and bundling sales, which departures from the other models of bundling and tying by allowing substitution between goods, flexible quantities of goods, resale of any goods, competitive market, and ex ante identical utility function for all individuals. Applying Inframarginal Analysis, this model shows that the function of bundling sales in a competitive market is to avoiding direct pricing of goods with the lowest transaction eflciency, like intangible information goods, meanwhile getting them involved in the division of labour and commercialised production, thereby promoting division of labour and aggregate productivity. According to this theory of bundling, bundling in a competitive market is Pareto eficient and it plays a very important role to utilize positive network eflects of division of labour on aggregate productivity. Antitrust prosecution should pay more attention to the intention to block free entry rather than bundling itself.

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Year of first publication

2002

Series

Department of Economics

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