428 PART • Market Structure and Competitive Strategy main course, and dessert, for $20 Then, the customer who loves dessert but couldn’t care less about an appetizer will order only the main dish and dessert, and spend $18 (saving the restaurant the cost of preparing an appetizer) At the same time, another customer who attaches a moderate value (say, $3 or $3.50) to both the appetizer and dessert will buy the complete dinner You don’t have to go an expensive French restaurant to experience mixed bundling Table 11.6 shows the prices of some individual items at McDonald’s, as well as the prices of “super meals” that include meat or fish items along with a large order of French fries TABLE 11.6 and a large soda Note that you can buy a Big Mac, a large fries, and a large soda separately for a total of $9.27, or you can buy them as a bundle for $6.99 You say you don’t care for fries? Then just buy the Big Mac and large soda separately, for a total of $6.68, which is $0.31 less than the price of the bundle Unfortunately for consumers, perhaps, creative pricing is sometimes more important than creative cooking for the financial success of a restaurant Successful restaurateurs know their customers’ demand characteristics and use that knowledge to design a pricing strategy that extracts as much consumer surplus as possible MIXED BUNDLING AT MCDONALD’S (2011) UNBUNDLED PRICE PRICE OF BUNDLE SAVINGS Chicken Sandwich $10.07 $7.89 $2.18 Filet-O-Fish $8.97 $6.79 $2.18 $4.69 Big Mac $9.27 $6.99 $2.28 Quarter Pounder $4.69 Quarter Pounder $9.27 $7.19 $2.08 Double Quarter Pounder $6.09 Double Quarter Pounder $10.67 $8.39 $2.28 10-piece Chicken McNuggets $5.19 10-piece Chicken McNuggets $9.77 $7.59 $2.18 Large French Fries $2.59 Large Soda $1.99 INDIVIDUAL ITEM PRICE Chicken Sandwich $5.49 Filet-O-Fish $4.39 Big Mac MEAL (INCLUDES SODA AND FRIES) Data from McDonald’s restaurant menu Tying • tying Practice of requiring a customer to purchase one good in order to purchase another Tying is a general term that refers to any requirement that products be bought or sold in some combination Pure bundling is a common form of tying, but tying can also take other forms For example, suppose a firm sells a product (such as a copying machine) that requires the consumption of a secondary product (such as paper) The consumer who buys the first product is also required to buy the secondary product from the same company This requirement is usually imposed through a contract Note that this is different from the examples of bundling discussed earlier In those examples, the consumer might have been happy to buy just one of the products In this case, however, the first product is useless without access to the secondary product Why might firms use this kind of pricing practice? One of the main benefits of tying is that it often allows a firm to meter demand and thereby practice price discrimination more effectively During the 1950s, for example, when Xerox had a monopoly on copying machines but not on paper, customers who leased Xerox