| This dissertation studies a variety of bundling and discount strategies adopted by dominant firms, analyze their corresponding competitive effects in the upstream-and-downstream context, as well as in two-sided markets; and discuss their implications for regulation and antitrust law enforcement.;The first essay investigates strategic effects of three-part tariffs in a sequential-move game and offers an equilibrium theory of three-part tariffs in a competitive context. I show that, compared with linear pricing equilibrium and two-part tariff equilibrium, a three-part tariff always strictly increases the dominant firm's (the leader's) profit when competing against a rival (the follower) with substitute products, in the absence of usual price discrimination motive. The competitive effect of a three-part tariff in contrast to linear pricing depends on the degree of substitutability between products: Competition is intensified when two products are more differentiated, yet softened when two products are more substitutable. This is in stark contrast with the competitive scenario posed by a two-part tariff: A two-part tariff always enhances competition and gives the highest total surplus of these three pricing schemes. My findings offer a new perspective on three-part tariffs, a perspective which could help antitrust enforcement agencies distinguish the exclusionary three-part tariff from the pro-competitive one.;The second essay extends the traditional literature on bundling and the burgeoning literature on two-sided markets by presenting a theoretical monopoly model of mixed bundling in the context of the portable video game console market---a prototypical two-sided market. Deviating from both traditional bundling literature and standard two-sided markets literature, we find that, under mixed bundling, both the standalone console price on the consumer side and the royalty rate on the game developer side are lower than their counterparts under independent pricing equilibrium. In our setting, mixed bundling acts as a price discrimination tool segmenting the market more efficiently as well as functions as a coordination device helping solve "the chicken or the egg" problem in two-sided markets. We further test the model predictions with new data from the portable video game console market, and find empirical support for all theoretical predictions. |
