Tying, Bundling, and Loyalty/Requirement Rebates
New York University - Leonard N. Stern School of Business - Department of Economics
RESEARCH HANDBOOK ON THE ECONOMICS OF ANTITRUST LAW, Einer Elhauge, ed.,Edward Elgar Publishing, Forthcoming
NET Institute Working Paper No. #10-26
NYU Law and Economics Research Paper No. 11-02
I discuss the impact of tying, bundling, and loyalty/requirement rebates on consumer surplus in the affected markets. I show that the Chicago School Theory of a single monopoly surplus that justifies tying, bundling, and loyalty/requirement rebates on the basis of efficiency typically fails. Thus, tying, bundling, and loyalty/requirement rebates can be used to extract consumer surplus and enhance profit of firms with market power. I discuss the various setups when this occurs.
Number of Pages in PDF File: 40
Keywords: tying, ties, bundling, bundled rebates, loyalty discounts, loyalty requirement rebates, single monopoly surplus, monopolization, market power, foreclosure, antitrust
JEL Classification: C72, D42, D43, K21, L12, L40, L41, L42
Date posted: December 25, 2010 ; Last revised: May 16, 2011
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