Assume a firm sells two complementary products.Bundling is more likely to be a successful price discrimination strategy when one group of customers is willing to pay a higher price for one of the items in the bundle and another group is willing to pay a higher price for the other item.

Question

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Bundling can be an effective price discrimination strategy if there are differences in willingness to pay for the individual products among different customer groups. This means that if one group of customers values one product more highly and another group values the other product more highly, bundling both products together may be an effective way to capture more total value from both groups.

Assume a Firm Sells Two Complementary Products