| dc.description |
This paper analyzes the strategic decision to integrate by rms that pro-
duce complementary products. Integration entails bundling pricing. We nd
out that integration is privately pro table for a high enough degree of product
di¤erentiation, that pro ts of the non-integrated rms decrease, and that con-
sumer surplus need not necessarily increase when rms integrate despite the
fact that prices diminish. Thus, integration of a system is welfare-improving
for a high enough degree of product di¤erentiation combined with a mini-
mum demand advantage relative to the competing system. Overall, and from
a number of extensions undertaken, we conclude that bundling need not be
anti-competitive and that integration should be permitted only under some
circumstances. |
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