Product bundling is a common tool to increase sales and profits for the firms when they sell products. In traditional market, because the consumer¡¦s reserve price to each product is different, adopting product bundling strategy can achieve their goal. Now , owing to the highly changed technology and the prevailing of computer and internet, there are plenty of forms and varieties of product bundling. It is more different to do the research about the product bundling in computer, software, or some high-tech information industries. In the light of the characteristic of these industries, it is necessary to modify the product bundling strategy to meet the demand. This study focuses on the product bundling strategy in software industry. A few days ago, in the case of Microsoft who violates the antitrust law, the public starts to pay attention to the product bundling strategy in software industry again. But the software industry has two very important characteristics. First, there are compatibility problems between different products. Second, it is difficult to define the boundary of products. So this study tries to build a model to explain the application of product bundling strategy in software industry, and use the model to confer the case of Microsoft. There are three objects in this study. First, analyzing the advantages and disadvantages of product bundling strategies in all kinds of conditions in the recent years. Second, using the model to prove that if there is only one monopoly firm in the main product market and it bundles its main and downstream products. Then the downstream competitor and the consumers will be harmed. Third, using the inference of the model to comment the case that the U.S department of justice who accuses Microsoft bundling its personal computer operation system and browser.

This dissertation consists of two chapters. Chapter 1 focuses on the barriers that diversifying companies could face and explore how barriers to entry differ across different types of entry. Chapter 2 turns the attention to the market competition among insurance companies that are already in a market and examines how product bundling impact insurers' market power. Chapter 1 proposes and estimates a multi-agent model of entry. The prior literature often treats the number of companies in a market as an exogenous measure of market structure. However, the number of companies is endogenously decided by the market structure and other participants. Thus, I propose a structural model of entry to address the endogenous entry decision. In addition, the estimations are conducted at each market-year level, therefore, it provides an opportunity to delineate the relative importance of barriers to entry across three dimensions: geographic, product, and time. I find that barriers to entry exist in the financial services industry, and can be quite substantial to the \textit{de novo} entrants. Overall, I find \textit{de novo} entrants are the ones most subject to barriers to entry across all markets. Expanding within a state is as costly as expanding within a product line. Upon further examination, I discover that product-specific knowledge, such as underwriting expertise, pricing schemes, and coverage designs, plays a critical role in a successful expansion. This information is also relatively more important than state-specific connections, such as how well the company knows its customers and connections with distribution channels. Among all product lines, I find that expertise in mortgage guaranty insurance creates the most barriers, and these barriers are most subject to impacts of the financial crisis. In Chapter 2, I turn the focus to the market competition \emph{within} a market and explore the impact of product bundling on market power. Product bundling is a popular way for companies to retain their customers and keep up with fast-changing market demand. In this chapter, I will specifically examine the impact of bundling on price elasticity for personal lines of insurance. Insurance demand estimation is well-explored in the literature because it is difficult to obtain individual-level data. I overcome this hurdle by using a random coefficients logit model, which incorporates flexible consumer preferences over companies' characteristics. The second difficulty in insurance demand estimation is that it is hard to find a good instrument for the endogenous price. Therefore, I propose a novel instrument, which exploits an idiosyncrasy in insurance tax laws for identification. I find that bundling, on average, can reduce consumers' price sensitivity. Thus, companies that can offer bundle-able products experience a less elastic demand and achieve market power. However, product bundling has differential impacts on the auto insurance and homeowners' insurance markets. Auto insurers that offer bundled packages experience less elastic demand in response to price increases. However, we do not observe similar patterns in the homeowners' insurance market, where doing so intensifies price elasticity. With a closer examination, we discover that the different valuation in homeowners is not driven by the financial ratings of insurers. This indicates that homeowners tend to value other characteristics, such as claims management and the quality of service, more than just price of the contract. / Business Administration/Risk Management and Insurance

This study sought to understand factors driving repurchase intentions for consumer electronics (CE) hardware and in particular mobile phones. The outcome of the study was expected to be of interest in academia and practice because it develops upon existing literature and identifies actionable variables that could be used to optimise market offerings. Based on a literature review it was hypothesised that the intent was driven by hedonic and utilitarian factors. These included conspicuousness and visibility; product bundling; reliability; technological features, usability of the product and the buyers’ age. The study tested these hypotheses using primary data. The method was employed to confirm the postulated drivers as well as to determine the direction of the effects. Data collection was conducted through a cross sectional internet survey enumerated in August 2010. The survey reached a broad sample of 144 responders. The analysis supported two of the six hypothesised drivers. The supported drivers were conspicuousness and usability. The recommendation was therefore to encourage the CE industry to focus on creating aesthetically appealing, fashionable devices that were intuitively easy to use requiring minimal assistance or product manuals. It also recommends that less emphasis be placed on durability, advanced features, on bundling additional extras and on targeting particular age groups. Copyright / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted