Document Type

Working Paper

Publication Date

3-7-2009

SSRN Discipline

Legal Scholarship Network; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; Antitrust & Regulated Industries eJournals; LSN Subject Matter eJournals; LSN Conferences & Meetings; Law School Research Papers - Public Law & Legal Theory; Canadian Law & Economics Association Meetings (CLEA); Intellectual Property Law eJournals

Abstract

Recent decisions all relying on a stylized example first provided by the Ortho court hold that a multiproduct seller that uses a bundled discount in a way that excludes an equally or more efficient competitor engages in predatory bundling According to these decisions a bundle can be considered predatory even when the price of the bundle exceeds its cost The article offers evidence demonstrating that the Orthos stylized example and its monopoly leveraging theory are erroneous The article further shows that even when a bundles price excludes more efficient competitors and even when a component in the bundle is priced below cost and thus sold at a loss it may still have welfare enhancing effects The result is that bundles that fail the discount allocation test and even bundles that fail the Brooke Group test may still be desirable The article provides a number of examples from the airline and telecommunication industries to illustrate that both exclusionary and below cost bundles can be not only welfare enhancing but also very common

Download

Share

COinS