Theories of Tying and Implications for Antitrust

Carlton , Dennis W.; Waldman, Michael

doi:10.2139/ssrn.809304

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Theories of Tying and Implications for Antitrust

Johnson School Research Paper Series No. 24-06

33 Pages Posted: 13 Oct 2005

See all articles by Dennis W. Carlton

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Michael Waldman

Cornell University - Samuel Curtis Johnson Graduate School of Management; Cornell SC Johnson College of Business

Date Written: July 2005

Abstract

This paper first reviews economic theories for why firms tie their products and then discusses our views concerning what this review implies concerning optimal antitrust policy for tying cases. The review considers efficiency rationales for tying, price discrimination rationales, and various exclusionary rationales that have recently been put forth. We specifically discuss the Chicago School view that tying should raise no antitrust concern and explain when that logic breaks down. In our discussion of optimal antitrust policy concerning tying our main point is that, because of the prevalence of efficiency driven tying in real-world markets and the difficulty that courts have in reliably identifying all the welfare consequences of a tie, in general there should be a high hurdle required for intervention in tying cases.

Keywords: Tie in sales

JEL Classification: L00, L12, L4, L40

Suggested Citation: Suggested Citation

Carlton, Dennis W. and Waldman, Michael, Theories of Tying and Implications for Antitrust (July 2005). Johnson School Research Paper Series No. 24-06, Available at SSRN: https://ssrn.com/abstract=809304 or http://dx.doi.org/10.2139/ssrn.809304