On Holders, Blades and Other Tie-In Sales

Alain Egli

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: Tie-in sales have a bad image because of anti-competitive effects. Notably, tying contracts allow monopolists to carry over monopoly power into markets where they meet competition. Most of the literature assumes a firm being monopolist in one market and facing competition in another. In contrast, we analyze two firms which both are monopolists in one market and competitors in the other. Under such a symmetric structure tying has competitive effects. Tie-in sales may increase the consumers' expected utility. By tying their products, the firms insure consumers against uncertain future demand

Keywords: Tie-in sales; leverage theory of tying; competition; expected utility (search for similar items in EconPapers)
JEL-codes: D21 D31 D43 L11 (search for similar items in EconPapers)
Date: 2004-07
New Economics Papers: this item is included in nep-com and nep-mic
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