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Efficient Durable Good Pricing And Aftermarket Tie‐In Sales

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  • DAVID L. KASERMAN

Abstract

The conditions under which a durable good supplier employs a tying arrangement that binds aftermarket purchases to the original sale was a central issue in the Kodak case. Two competing theories were presented in that case. Importantly, neither of these provides an efficiency‐based explanation for the observed behavior. Subsequent theories provide several efficiency‐driven motivations for aftermarket tying. None of these, however, rely upon efficient contracting between the buyer and the seller of the durable good. This article demonstrates the conditions under which such a contract will contain an aftermarket tie‐in provision. (JEL L42)

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  • David L. Kaserman, 2007. "Efficient Durable Good Pricing And Aftermarket Tie‐In Sales," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 533-537, July.
    • Handle: RePEc:bla:ecinqu:v:45:y:2007:i:3:p:533-537
    DOI: 10.1111/j.1465-7295.2007.00022.x
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    References listed on IDEAS

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    Cited by:

    1. Heubrandner, Florian & Skiera, Bernd, 2010. "Time preference and the welfare effects of tie-in sales," Economics Letters, Elsevier, vol. 108(3), pages 314-317, September.
    2. Burström, Thommie & Wilson, Timothy L. & Wincent, Joakim, 2020. "Dynamics of after-sales managers’ strategizing work: What, why and how," Journal of Business Research, Elsevier, vol. 110(C), pages 119-131.

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    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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