Application bundling in system markets

Alexandre De Cornière (TSE, Université Toulouse 1 Capitole)


Jeudi 12 octobre 2017 - de 13h à 14h, Salle IMAPP (De Robien), Faculté des sciences économiques

Présentation d'Alexandre De Cornière (TSE, Université Toulouse 1 Capitole)
En collaboration avec Greg Taylor (Oxford Internet Institute, University of Oxford)

Résumé / Abstract :
Motivated by recent investigations over Google's practices in the smartphone industry, we study bundling in markets for devices that allow consumers to use applications. The presence of applications on a device increases demand for it, and application developers earn revenues by interacting with consumers.

 A firm that controls multiple applications can offer them to device manufacturers either individually or as a bundle. We present a novel mechanism through which anti-competitive bundling can be profitable: Bundling reduces rival application developers' willingness to pay manufacturers for inclusion on their devices, and allows a multi-application developer to capture a larger share of industry profit. Bundling can also strengthen competition between manufacturers and thereby increase consumer surplus, even if it leads to foreclosure of application developers and a loss in product variety.

Lien / Download : Application bundling in system markets