WHY FIRMS MAY PREFER NOT TO PRICE DISCRIMINATE VIA MIXED BUNDLING

We analyze a simple model of joint purchase discounts using a discrete choice framework to characterize consumer choices. The model suggests that mixed bundling is more likely to be associated with monopoly. This is due to the benefits reaped via price discrimination. In a duopoly environment, however, only pure components pricing may be offered in equilibrium since firms fear the extra degree of competition inherent in mixed bundling.