‘Bundling'in Learning

In this paper, we apply the literature of bundling, tie-in sales and vertical integration to higher education. Students are often required to purchase a package or bundle of courses, some of which are completely unrelated to and independent of their major field of study. We show that this kind of ‘bundling' policy can be utilized as a profit-maximizing strategy for universities that have a degree of monopoly power. They can extract consumer surplus from their students by bundling whenever price discrimination across courses and/or across students is legally prohibited, or frowned on socially.