Bundling and downstream entry
Abstract
We investigate the incentives of an upstream supplier to enter the downstream market where the alternative is to sell via a downstream platform who offers all products as a bundle. When consumers can multihome, following entry the supplier faces increased downstream competition but benefits from greater price setting flexibility. We show that entry becomes relatively more profitable if the products are closer substitutes or the correlation between product valuations is weaker. Our results have important implications on recent developments in industries such as video and music streaming.
Fields of Study & Subjects
Digital Platforms and Economics
Merger and Competition Analysis
Consumer Market Behavior and Pricing
Publication details
- Journal / source
- Information Economics and Policy
- Volume
- 72
- Pages
- 101160–101160
- Publication date
- 29 January 2026
- Language
- EN