Intertemporal Mixed Bundling and Buying Frenzies
Volume: Volume 30, No. 4
Issue: Winter 1999
Pages: pp. 694-718
Authors: Patrick DeGraba and Rafi Mohammed
Title: Intertemporal Mixed Bundling and Buying Frenzies
Abstract: By initially selling goods only in bundles and subsequently selling unsold units individually, a multiproduct seller can create a buying frenzy in which his profit is higher than it would be if he sold all units individually at their market clearing prices. In this frenzy, high-valuation customers buy a bundle because they expect quantity rationing when units are sold individually. Their purchases reduce the quantity to be sold individually, causing the shortages that result in rationing. The bundle's price exceeds the sum of the individual prices, a fact observed in markets for rock concert tickets.
JEL Classification
Production, Pricing, and Market Structure; Size and Size Distribution of Firms
Concentration, Product Differentiation, Entry and Exit (L110)
Marketing (M310)
Intertemporal Firm Choice and Growth, Investment, or Financing (D920)