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We analyze mixed bundling in two-sided markets where installed base effects are present and find that the pricing structure deviates from traditional bundling as well as the standard two-sided markets literature-we determine prices on both sides fall with bundling. Mixed bundling acts as a price discrimination tool segmenting the market more efficiently. Consequently, as a by-product of this price discrimination, the two sides are better coordinated, and social welfare is enhanced. We show unambiguously that platform participations increase on both sides of the market. After theoretically evaluating the impact mixed bundling has on prices and welfare, we take the model predictions to data from the portable video game console market. We find empirical support for all theoretical predictions. This paper was accepted by J. Miguel Villas-Boas, marketing.

We consider a seller who owns two capacity-constrained resources and markets two products (components) corresponding to these resources as well as a bundle comprising the two components. In an environment where all customers agree that one of the two components is of higher quality than the other and that the bundle is of the highest quality, we derive the seller's optimal bundling strategy. We demonstrate that the optimal solution depends on the absolute and relative availabilities of the two resources as well as upon the extent of subadditivity of the quality of the products. The possible strategies that can arise as equilibrium behavior include a pure components strategy, a partial- or full-spectrum mixed bundling strategy, and a pure bundling strategy, where the latter strategy is optimal when capacities are unconstrained. These conclusions are contrary to findings in the prior literature on bundling that demonstrated the unambiguous dominance of the full-spectrum mixed bundling strategy. Thus, our work expands the frontier of bundling to an environment with vertically differentiated components and limited resources. We also explore how the bundling strategies change as we introduce an element of horizontal differentiation wherein different types of customers value the available components differently.

Recently, the general trend in the airline industry has been to generate ancillary revenue by offering additional services. Instead of completely separating ancillary services from tickets as optional components, most of the traditional airlines offer the so-called branded fares which bundle some of the ancillary components to an inclusive fare preventing a possible negative impact on the customers’ perception and brand image (mixed bundling). For instance, seat reservation and baggage transportation are often already included in the default fare. In this study, we analyse data to evaluate different bundle-pricing policies within the mixed bundling context. We use statistical regression methods to infer individual behaviour by analysing aggregated data on market level from a major European airline. We tackle the question of how to optimally price bundled fares. With the General Data Protection Regulation in place today, such high-level models which only require aggregated market data and no individual personal data are becoming more relevant for business analytics. We demonstrate how aggregate data still allow to investigate individual behaviour and our data analysis reveals the existence and variability of price elasticity. The results can help companies to segment their markets based on price elasticity and optimise their ancillary offerings accordingly.

Technological advances enable sellers to price discriminate based on a customer's revealed purchasing intentions. E-tailers can track items in online shopping carts and radio frequency identification tags enable retailers to do the same in brick-and-mortar stores. To leverage this information, it is important to understand how this new visibility impacts pricing and market outcomes. We propose a model in which a seller sets prices for goods A and B , allowing for the possibility of sequentially revising the price for good B if the buyer reveals a preference for good A by making an initial purchase decision. We derive comparative statics results for the prices of products that have superadditive or subadditive values, and also for the associated profits. We also run simulations for a range of distributions of buyer values, to compare sequential pricing with mixed bundling. The results indicate that information technology-enabled sequential pricing can increase profits relative to mixed bundling or pure components pricing for substitute goods due to a reduction of intraseller competition. We also consider the case of goods with positively or negatively correlated values and find that when sellers can condition the second good's price on the buyer's decision to purchase the first good, sequential pricing increases profits when customer's values for the goods are highly positively correlated.

For product categories such as cars, computers, vacation packages, and new homes, consumers usually choose not only the product itself, but also various options for the product. Sellers decide how to present these options to consumers, and they often sell options both individually and in bundles (mixed bundling). In this research, we examine how mixed bundling affects consumers’ inferences about the options and choices among the options. We demonstrate that as long as the seller’s motives for bundling options are not perceived to be negative by consumers, options offered both individually and in bundles are perceived to be more important and are more likely to be chosen than options offered only individually.

Bundling is a pervasive marketing strategy in real business. In this paper, we study the strategy of mixed bundling under a stochastic market for two products for a retailer who has monopolistic power in the market, and the bundle consists of one unit of each individual product. The retailer needs to make joint pricing and inventory decisions with the aim of maximizing expected profit. Firstly, the relationship between the prices and market shares of the three bundle variations in the mixed bundling strategy is modeled after the reservation price model, which is commonly adopted in the bundling literature. Based on the market shares, a two-stage stochastic model is proposed to determine inventory decisions, including the ordering decision before the selling season starts and the allocation decisions after demands are realized. Global concavity in the order quantities is demonstrated. For experimental purposes, an algorithm incorporating both pricing and inventory decisions is presented. We measure the importance of incorporating inventory matters into bundling decisions under the stochastic market by calculating expected loss of profit, which can exceed 5 % under some parameter settings. In the numerical experiments, we identify two attributes of mixed bundling performance, which are bundling pricing effect and inventory pooling effect.

This research investigates mixed bundling pricing in oligopoly markets with both comparison and uninformed shoppers. We examine how additivity and correlation of multi-product customer values influence single item and bundle prices. We characterize the mixed strategy equilibrium and for specific parameters we compute undominated pricing strategies. We also conduct two sets of controlled laboratory experiments with human decision makers, focusing on additivity and on correlation. Across all conditions sellers display a systematic bias by overemphasizing comparison shoppers. The markets are highly efficient with low pricing for both buyer-types. Thus, competitive pressure seems to reduce the exploitative properties of monopolist bundling.

Purpose – The purpose of this paper is to conceptualize a typology of supply-side resilience capabilities and empirically validates these capabilities and their constituent bundles of practices. Design/methodology/approach – The study is primarily qualitative, employing the critical incident technique to collect data across 22 firms and seeking to validate how and why practice bundles form and relate to operations performance. It contains a frequency of occurrence analysis for the purpose of triangulation, a minor statistical part to provide some additional evidence of bundle formation and correlation between adoption of bundles of practices and recovered operations performance after upstream supply chain disruptions. Findings – Four supply-side resilience capabilities are conceptualized along two dichotomous dimensions – “proactive/reactive” and “internal/external” – in a 2×2 matrix as proactive-internal, proactive-external, reactive-internal and reactive-external resilience capabilities. Empirical support for the conceptualized typology is found. Bundles of specific practices that can be associated with each capability are identified. Moreover, the study finds a relationship between these practice bundles and recovered operations performance. Research limitations/implications – The statistical part is used just to provide some additional evidence through factor and regression analyses that these capabilities exist and do benefit adopting firms. Practical implications – Specifies practices that lead to recovered operations performance in the event of supply disruptions. Originality/value – Advances current theory by operationalizing resilience as a set of dynamic capabilities in terms of practice bundles that aid in recovering operations performance upon supply disruptions.

Vitamin K epoxide reductase (VKOR) generates vitamin K hydroquinone to sustain γ-carboxylation of many blood coagulation factors. Here, we report the 3.6 Å crystal structure of a bacterial homologue of VKOR from Synechococcus sp. The structure shows VKOR in complex with its naturally fused redox partner, a thioredoxin-like domain, and corresponds to an arrested state of electron transfer. The catalytic core of VKOR is a four transmembrane helix bundle that surrounds a quinone, connected through an additional transmembrane segment with the periplasmic thioredoxin-like domain. We propose a pathway for how VKOR uses electrons from cysteines of newly synthesized proteins to reduce a quinone, a mechanism confirmed by in vitro reconstitution of vitamin K-dependent disulphide bridge formation. Our results have implications for the mechanism of the mammalian VKOR and explain how mutations can cause resistance to the VKOR inhibitor warfarin, the most commonly used oral anticoagulant. Structure of a warfarin target Mammalian vitamin K epoxide reductase (VKOR) catalyses the generation of vitamin K hydroquinone, a decisive step in the vitamin K cycle that is required to sustain blood coagulation. The X-ray crystal structure of a bacterial homologue of VKOR has now been determined. It shows VKOR in a complex with its redox partner, a thioredoxin-like domain, and corresponds to an arrested state of electron transfer. This points to a possible mechanism by which VKOR uses electrons from newly synthesized proteins to reduce the quinone. This work may help explain how mutations to VKOR cause resistance to warfarin, the ubiquitous anticoagulant that acts by inhibiting VKOR. The γ-carboxylation of many blood coagulation factors relies on the generation of vitamin K hydroquinone by the enzyme vitamin K epoxide reductase (VKOR), of which the anticoagulant warfarin is an inhibitor. Here, the X-ray crystal structure of a bacterial homologue of VKOR is presented; the results have implications for the mechanism of action of mammalian VKOR and explain how mutations can cause warfarin resistance.

We study the agency costs of delegated public service provision, focusing on the link between organizational forms and uncertainty at project implementation. We consider a dynamic multitask moral hazard environment where the mapping between effort and performance is ex ante uncertain but new information may arise during operations. Our analysis highlights the costs and benefits that bundling planning and implementation—as under public-private partnerships—can bring in terms of project design and operational costs under various scenarios, possibly allowing for asymmetric information, moral hazard and renegotiation. It also shows that relying on private finance enhances the benefits of bundling only if lenders have enough expertise to assess project risks.