C.-Philipp Heller, Heiner Lindenlaub, Frank P. Maier-Rigaud
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Exclusionary Bundle Discounts: A Simple Model with two Applications
We develop a simple theoretical model of exclusionary bundle discounts. Based on the model, we develop a screening test for exclusionary bundle discounts. This test only requires knowledge of prices and an estimate of the coverage of the bundle discount. We apply this test to the Vodafone/Liberty Global merger in Germany and find bundle discounts in the German broadband Internet access market consistent with exclusion. We finally use the model to simulate the merger's price effects.
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