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Glossary » Bundling

Bundling

Product bundling refers to the practice of selling many items together in one package. These types of situations occur frequently in imperfectly competitive product marketplaces. Often, companies in the telecommunications, financial services, healthcare, and technology industries provide bundles of goods.

A common example is the software industry (combining a word processor, a spreadsheet, and a database into a single office suite), cable television (generally offering many channels at a single price in the United States), and the fast food industry (combining multiple items into one meal). A package deal, compilation, or anthology are all terms used to describe a collection of items.

Bundling has been used by companies to discriminate among customers or to expand their reach into related markets. Bundling in the right proportions benefits the company, decreases a competitor’s earnings and overall welfare, and can cause them to leave the market.