Take Action

Home | Faculty & Research Overview | Research

Research Details

The Limits of Bundling: High Demand with Low Inventories


There is an increased interest in bundle selling mechanisms especially with the rise of subscription services. This rise was mainly fueled by the success of subscription services in the digital markets where inventory is unlimited. However, recently there is a slew of subscriptions services that emerged in the retail industry where inventory is limited. In this paper, we take a rst step towards understanding the impact of key operational metrics such as inventory levels and limited selling horizons on the optimal bundle selling strategy. We study a dynamic bundle pricing problem when the rm is selling multiple items but with limited inventory. We propose a new scaling regime to study this problem, called high-demand regime, where we scale the arrival rate in order to capture markets where demand is high but inventory is limited. Our results highlight a fundamental limitation of bundling in such markets. In particular, rms should avoid bundling fast moving items together and should rather sell them separately (or bundle fast moving items with slow moving items). Moreover, depending on the tail of the valuation distribution, the rm should either consider static pricing of the items or dynamic pricing. We provide closed form solutions for the static and dynamic pricing policies.


Working Paper


Tarek Abdallah, Josh Reed, Arash Asadpour

Date Published



Abdallah, Tarek, Josh Reed, and Arash Asadpour. 2020. The Limits of Bundling: High Demand with Low Inventories.


Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more


Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.


Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more