DP10313 | Pricing a Package of Services

Publication Date

21/12/2014

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

We study a tractable two-dimensional model of price discrimination. Consumers combine a rigid with a more flexible choice, such as choosing the location of a house and its quality or size. We show that the optimal pricing scheme involves no bundling if consumer types are affiliated. Conversely, if consumer types are negatively affiliated over some portion of types then some bundling occurs.