Bundling and Tying

11 Pages Posted: 19 Oct 2014

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

Date Written: October 17, 2014

Abstract

We discuss strategic ways that sellers can use tying and bundling with requirement conditions to extract consumer surplus. We analyze different types of tying and bundling creating (i) intra-product price discrimination; (ii) intra-consumer price discrimination; and (iii) inter-product price discrimination, and assess the antitrust liability that these practices may entail. We also discuss the impact on consumers and competition, as well as potential antitrust liability of bundling “incontestable” and “contestable” demand for the same good.

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

Economides, Nicholas, Bundling and Tying (October 17, 2014). NET Institute Working Paper No. 14-22, Available at SSRN: https://ssrn.com/abstract=2511508 or http://dx.doi.org/10.2139/ssrn.2511508

Nicholas Economides (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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