Microsoft packages are sold together for a single price. This is attractive for information goods since the marginal cost of adding an additional good to...

Microsoft packages are sold together for a single price. This is attractive for information goods since the marginal cost of adding an additional good to a bundle is negligible. Explain the economic effects of such behaviour.

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Bundling enables reduction of the dispersion of willingness to pay by customers. This is in itself a form of price discrimination
Bundling also increases the barriers to entry of new firms into the market hence the firms already in the market retain their high profit margins.

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Faimus answered the question on February 3, 2018 at 13:11

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