Harmful Unbundling

Abstract

Companies have been unbundling their products: they have been selling products and services separately that were traditionally sold together. In doing so, they have raised their profits. This paper uses a model to show how companies can use unbundling to increase profits and decrease competition. Unbundling raises problems when it increases information cost, information asymmetry, and barriers to entry. This paper also discusses the U.S. case law that has grasped with these issues of bundling and unbundling.