Tying, Bundling, and Loyalty/Requirement Rebates
RESEARCH HANDBOOK ON THE ECONOMICS OF ANTITRUST LAW, Einer Elhauge, ed.,Edward Elgar Publishing, Forthcoming
40 Pages Posted: 25 Dec 2010 Last revised: 16 May 2011
Date Written: February 2011
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.
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
Suggested Citation: Suggested Citation