Bundling and pricing of product with after-sale services (Q840629)

Summary: Bundling is the sale of two or more products in combination as a package. In this paper, we consider the bundling and pricing of a complex durable product with after-sales repair and maintenance services. Product and service are two different, but related markets for this scenario. The problems of bundling and pricing are considered for two product market structures: monopoly and duopoly. In the monopoly case, the decision framework is an optimisation problem, whereas for the duopoly, the strategic interactions of the two firms are modelled as a two-stage non-cooperative game. These decision frameworks enable manufacturing firms to decide upon the product-service bundling and pricing.