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Bundling is also referred to as package tie-in and tends to occur when one product is sold in proportion to another as a requirement for the sale.

It is related to the concept of tied selling. For example, a computer manufacturer may require customers to purchase along with the computer all or a specified amount of ancillary products such as floppy disks and printing paper. Alternatively, the sale may be made as a complete package such as an automobile equipped with all options including automatic transmission, cassette-radio and air conditioning.

Bundling of products may be a source of economies or efficiencies for the manufacturer, part of which may be reflected in a lower composite price for the buyer than if all the different products were supplied or bought separately. However, bundling may also make it difficult for firms to enter different product segments of the market.

The competition implications of bundling, including that of tied selling generally, are complex and need to be evaluated on a case by case basis adopting a rule of reason approach.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.

Cross References:
Bundling (of telecommunications services)
Tied selling


Statistical Theme: Financial statistics

Created on Thursday, January 3, 2002

Last updated on Tuesday, November 29, 2005