Tying with Network Effects

Jay Choi, Doh-Shin Jeon and Michael D. Whinston

American Economic Review, 2026, vol. 116, issue 1, 332-74

Abstract: We develop a leverage theory of tying in markets with network effects. When a monopolist in one market cannot perfectly extract surplus from consumers, tying can be a mechanism through which unexploited consumer surplus is used as a demand-side leverage to create a "quasi-installed base" advantage in another market characterized by network effects. Our mechanism does not require any precommitment to tying; rather, tying emerges as a best response that lowers the quality of tied-market rivals. While tying can lead to exclusion of tied-market rivals, it can also expand use of the tying product, leading to ambiguous welfare effects.

JEL-codes: D41 D85 K21 L15 L40 (search for similar items in EconPapers)
Date: 2026
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Related works:
Working Paper: Tying with Network Effects (2026)
Working Paper: Tying with Network Effects (2025)
Working Paper: Tying with Network Effects (2024)
Working Paper: Tying with network effects (2024)
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DOI: 10.1257/aer.20240461

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