Upstream Bundling and Leverage of Market Power

Commodity bundling and the burden of monopoly

Alexandre de Cornière and Greg Taylor

The Economic Journal, 2021, vol. 131, issue 640, 3122-3144

Abstract: We present a novel rationale for bundling in vertical relations. In many markets, upstream firms compete to be in the best downstream slots (e.g., the best shelf in a retail store or the default application on a platform). If a multi-product upstream firm faces competition for a subset of its products, we show that tying the monopolised product with the competitive ones can reduce upstream rivals’ willingness to offer slotting fees to retailers. This strategy does not rely on entry deterrence and can be achieved through contractual or even virtual tying. The model is particularly relevant to the Google-Android case.

Date: 2021
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Upstream bundling and leverage of market power (2021)
Working Paper: Upstream Bundling and Leverage of Market Power (2019)
Working Paper: Upstream Bundling and Leverage of Market Power (2018)
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