We consider competition among sellers when each of them sells a portfolio of
distinct products to a buyer having limited slots. We study how bundling affects
competition for slots. Under independent pricing, equilibrium often does not exist
and hence the outcome is often inefficient. When bundling is allowed, each seller
has an incentive to bundle his products and an efficient equilibrium always exists.
Furthermore, in the case of digital goods, all equilibria are efficient if slotting contracts ...
We consider competition among sellers when each of them sells a portfolio of
distinct products to a buyer having limited slots. We study how bundling affects
competition for slots. Under independent pricing, equilibrium often does not exist
and hence the outcome is often inefficient. When bundling is allowed, each seller
has an incentive to bundle his products and an efficient equilibrium always exists.
Furthermore, in the case of digital goods, all equilibria are efficient if slotting contracts are prohibited. We also identify portfolio effects of bundling and analyze the
consequences on horizontal mergers. Finally, we derive clear-cut policy implications.
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