Bundled discounts—discounts or rebates offered to customers who purchase multiple products from a firm—are ubiquitous in our economy and can benefit consumers through lower prices. However, bundled discounts also have the potential to harm competition by excluding competitors or potential competitors in cases in which the firm offering the bundled discount has monopoly power in the sale of at least one of the products in the bundle.
In this article, published in Volume 20, Issue 1, of The Price Point, NERA Senior Consultant Dr. Claire Chunying Xie, Consultant Dr. Emily Walden, and former Senior Consultant Dr. Stephanie Demperio discuss the use of the discount attribution test to assess the competitive effects of bundled discounts. They provide examples illustrating why the discount attribution test alone may not be sufficient to determine the harm to competition, given the complexity of real-world cases.
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