Bundling has moved beyond a straightforward pricing tactic to become a defining force in how industries compete. In this latest Insights@Questrom Q&A, Florian Ederer, Allen and Kelli Questrom Professor in Markets, Public Policy, and Law, examines how large-scale “ecosystem” bundles—such as multi-resort ski passes—are reshaping competitive dynamics, influencing consumer behavior, and raising new questions about market power.
Why has bundling become such a dominant strategy across industries in recent years?
It is useful to separate two distinct ideas that often get conflated: bundling and two-part pricing. Two-part pricing, where consumers pay an upfront fee and then face a low or zero marginal price for usage, has long existed in the ski industry in the form of traditional season passes. That model already addressed some key frictions by smoothing demand, generating predictable revenue, and allowing firms to extract more surplus from high-frequency users. What is newer is the scale and scope of bundling. Instead of selling access to a single resort under a two-part tariff, firms now bundle access to large portfolios of resorts into one pass. This allows firms to pool demand across locations, reduce consumer substitution toward independent competitors, and better match prices to heterogeneous preferences over geography and travel flexibility. It also raises switching costs more significantly, since consumers are not just committing to one resort but to an entire ecosystem of options. So while the demand-smoothing and upfront commitment aspects are not new, bundling amplifies them and adds a competitive or even anti-competitive dimension.
When companies build bundled “ecosystems” like the Epic and Ikon passes, what are they really optimizing for—revenue, customer lock-in, data, or something else?
When companies build bundled ecosystems like Epic or Ikon, they are optimizing along several dimensions simultaneously rather than just maximizing short-run revenue. The upfront sale of a season pass brings in cash early and reduces uncertainty about future demand, which is particularly valuable in weather-dependent industries like skiing. At the same time, it creates a form of behavioral lock-in. Once a consumer has paid, their subsequent decisions are about how to “use” the pass rather than whether to consider alternatives. That reduces demand price sensitivity. Data collection is part of the story, but in the skiing context it is really much less important than in digital markets. The primary economic logic is about managing revenue volatility and exerting market power vis-à-vis consumers and suppliers.
What does this shift toward ecosystem-based competition tell us about how firms are redefining market boundaries and competitive advantage?
The shift toward ecosystem-based competition in this context is less about a benign redefinition of market boundaries and more about consolidation in what used to be a highly fragmented industry. Skiing historically operated as a collection of relatively independent resorts competing on location, quality, and local pricing. The rise of large bundled passes reflects ownership concentration and coordination across resorts, which allows firms to repackage what were previously separate products into a single offering. That can create real efficiencies, but it also changes the competitive landscape in ways that may disadvantage smaller or independent players who cannot match the scale of the bundle. In effect, competition shifts away from head-to-head rivalry between resorts and toward competition between a small number of large networks. That tends to raise barriers to entry and can make it harder for consumers to meaningfully compare alternatives, since the relevant choice becomes which ecosystem to join rather than which individual product to purchase.
How do bundled offerings change consumer decision-making? Are consumers genuinely getting more value, or are they being nudged into higher total spending?
Bundled offerings significantly change consumer decision-making. Instead of evaluating each purchase on a marginal basis, consumers make a large upfront decision and then treat subsequent usage as effectively free. For frequent users, this can genuinely increase value and lower the effective price per use. However, the same structure can also lead to over-purchasing. Consumers may buy more access than they ultimately use, or they may anchor on the perceived deal rather than their actual expected usage. The sunk-cost effect plays an important role here. Once the pass is purchased, there is a strong incentive to use it, even if alternative options might be more attractive. In that sense, bundling can increase total spending while still being perceived as consumer-friendly.
In your view, what are the clearest signals that bundling is starting to limit competition rather than enhance it?
The clearest signals that bundling may be limiting competition arise when it moves from being one option among many to effectively becoming the default. One indicator is when standalone products remain technically available but are priced so high that they are not realistic substitutes for most consumers. Another is when the bundle leverages market power from one segment into another, making it difficult for competitors who operate in only part of the market to compete effectively. You also see concerns when rivals cannot replicate the bundle because of scale constraints or access limitations, which can raise barriers to entry. At that point, bundling is no longer just a pricing strategy but a potential mechanism for exclusion.
How does bundling interact with pricing strategies, like the rise of very high single-day prices, to steer consumer behavior toward subscriptions or season-long commitments?
Bundling and pricing strategies are closely intertwined, particularly through the use of very high single-day prices. These prices are not just reflecting cost differences. Instead, they are part of a deliberate strategy to steer consumers toward season-long commitments. By making the à la carte option expensive, firms effectively create a menu where the bundle appears disproportionately attractive. This is a classic form of price discrimination. Consumers with high expected usage self-select into the bundle, paying upfront, while occasional users either pay high spot prices or opt out.
What parallels do you see between the ski industry and other sectors (e.g., streaming, airlines, tech platforms) where bundling and ecosystem control are reshaping competition?
The ski industry also fits into a broader shift toward subscription-based models across many sectors. While season passes still involve an upfront payment, the underlying logic is very similar to subscriptions: firms are trying to convert irregular, one-off transactions into ongoing, committed relationships. In streaming, this is explicit with monthly subscriptions for access to content libraries. In airlines, loyalty programs and bundled perks serve a similar function by encouraging repeated engagement over time. In tech, subscription bundles like cloud services or software suites lock users into recurring payments and ecosystems. What ties these models together is the emphasis on predictability and retention. Subscriptions smooth revenue, reduce churn, and make demand less sensitive to short-run price changes. They also shift the consumer mindset from “should I buy this today?” to “am I getting enough value from what I already pay for?” That framing tends to reduce active comparison shopping and increases consumer inertia. The ski pass model is, in some sense, a seasonal version of this broader subscription economy, where firms are increasingly competing to secure long-term commitments rather than individual transactions.
Looking ahead, do you expect regulators to more aggressively scrutinize bundling strategies, or is this simply the new normal in how firms compete?
I would expect regulators to pay closer attention to bundling, but in a targeted rather than sweeping way. Bundling is often efficiency-enhancing and can benefit consumers, so there is a general reluctance to treat it as inherently problematic. However, concerns arise when bundling interacts with market power or produces exclusionary effects. In those cases, regulators may scrutinize whether the bundle forecloses competition or distorts consumer choice. In the ski industry, that might mean looking at whether pricing structures effectively eliminate standalone competition or harm consumers who only have a choice between two large duopolists (Ikon and Epic).
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