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Tying and entry deterrence in vertically differentiated markets

Eugen Kovac

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: This paper analyzes tying and bundling as an entry deterrence tool. It shows that a multi-product firm can defend its monopoly position in one market via tying even when it does not have market power in another market. This is shown on a model with two complementary goods, each of which is vertically differentiated and in which consumers’ preferences for the goods are positively correlated. Some possible ways of defending against entry deterrence, and implications for competition policy, are discussed.

Keywords: Industrial organization; vertical differentiation; anti-trust policy; entry deterrence; foreclosure; tying; bundling. (search for similar items in EconPapers)
JEL-codes: L11 L12 L13 L41 (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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