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Does bundling add-ins help consumers?

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2 Author(s)

Third party developed software add-ins enhance the functionality of a large variety of base software such as operating systems, word processors, spread sheets, graphics software and games. Base software producers often bundle some of these add-ins in new versions of base software. This kind of bundling has come under increased scrutiny of regulators in US and Europe. We construct a model of the add-in market to show that it is possible for the consumers to benefit from bundling of add-ins and base software as the price of the bundled software is often much less than the sum of prices of the base software and add-ins. This result is validated with some empirical data.

Published in:

System Sciences, 2003. Proceedings of the 36th Annual Hawaii International Conference on

Date of Conference:

6-9 Jan. 2003