  We study optimal bundling when consumers differ in one dimension. We
introduce a partial order on the set of bundles defined by (i) set inclusion
and (ii) sales volumes (if sold alone and priced optimally). We show that if
the undominated bundles with respect to this partial order are nested, then
nested bundling (tiered pricing) is optimal. We characterize which nested menu
is optimal: Selling a given menu of nested bundles is optimal if a smaller
bundle in (out of) the menu sells more (less) than a bigger bundle in the menu.
We present three applications of these insights: the first two connect optimal
bundling and quality design to price elasticities and cost structures; the last
one establishes a necessary and sufficient condition for costly screening to be
optimal when a principal can use both price and nonprice screening instruments.
