Working Paper: NBER ID: w23105
Authors: Chienyu Lai; Andreas Lange; John A. List; Michael K. Price
Abstract: This note links the commodity bundling literature with the literature on the private provision of public goods. We discuss the potential profitability of bundling strategies for both private firms and charitable organizations. Even in the absence of consumption complementarities, we show important cases when private and public goods should be bundled. For example, both a monopolist and a charity can profit from bundling the goods they provide. Linking sales to charitable contributions can also be beneficial for for-profit firms as it alleviates price-competition. Beyond providing a theoretical framework for understanding the incentive properties of bundling private and public goods, the study lends insights into the debate on the efficacy of corporate social responsibility.
Keywords: Bundling; Public Goods; Corporate Social Responsibility; Profitability; Market Competition
JEL Codes: D4; H4; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| monopolist's decision to bundle (L12) | profitability (L21) |
| elasticity of demand for high-value consumers > twice average price elasticity (D12) | bundling increases profits (D43) |
| bundling alleviates price competition among firms (L11) | positive profits (D33) |
| consumer demand characteristics (D12) | monopolist's decision to bundle (L12) |
| monopolist's decision to bundle (L12) | alleviates price competition (L11) |