Price bundling in competitive markets

This research investigates mixed bundling pricing in oligopoly markets with both comparison and uninformed shoppers. We examine how additivity and correlation of multi‐product customer values influence single item and bundle prices. We characterize the mixed strategy equilibrium and for specific parameters we compute undominated pricing strategies. We also conduct two sets of controlled laboratory experiments with human decision makers, focusing on additivity and on correlation. Across all conditions sellers display a systematic bias by overemphasizing comparison shoppers. The markets are highly efficient with low pricing for both buyer‐types. Thus, competitive pressure seems to reduce the exploitative properties of monopolist bundling.