We extend the model of Matutes and Regibeau (1988) to examine the incentive to bundle in both monopoly and duopoly market. Matutes and Regibeau (1988) assumed the products were complementary products in a duopoly market. Under the assumption of complementary products, bundling and independent pricing is same for a monopoly. In a duopoly market, independent pricing is always preferred. We extend their model by assuming the products are non-complementary. By adding the single product consumption, we find different results. In a monopoly market, when the reservation price is relatively small, independent pricing dominates bundling and the sum of the prices of the products under independent pricing is higher than the bundle price. If reservation price is high, the results are opposite. In addition, the market can never be fully served under bundling as reservation price increases. In a duopoly market, we find that bundling may be preferred.
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