Tying, Foreclosure, and Exclusion

Michael Whinston

American Economic Review, 1990, vol. 80, issue 4, 837-59

Abstract: In recent years, the "leverage theory" of tied good sales has faced heavy and influential criticism. In an important sense, though, the models used by its critics are actually incapable of addressing the leverage theory's central concerns. Here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power. The mechanism through which this leverage occurs, its profitability, and its welfare implications are discussed in detail. Copyright 1990 by American Economic Association.

Date: 1990
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