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Tying as a Response to Demand Uncertainty

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Author Info
Frank Mathewson
Ralph A. Winter

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Abstract

This article examines requirements tying of a competitively supplied good to a monopolized good. It expands the set of market conditions in which this instrument is known to be profitable. With heterogeneous, privately informed buyers, a firm can profit by tying two goods even when demands for the goods are price independent - providing the demands are stochastically dependent. We investigate the profitability of tying as a response to stochastic demand, as well as the effects of tying on prices and the extent of the market served.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28199723%2928%3A3%3C566%3ATAARTD%3E2.0.CO%3B2-%23&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 28 (1997)
Issue (Month): 3 (Autumn)
Pages: 566-583
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Handle: RePEc:rje:randje:v:28:y:1997:i:autumn:p:566-583

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  1. Hollander, Claude & Hollander, Abraham, 2006. "Triple Play Time," MPRA Paper 3552, University Library of Munich, Germany. [Downloadable!]
  2. Reisinger, Markus, 2004. "The Effects of Product Bundling in Duopoly," Discussion Papers in Economics 477, University of Munich, Department of Economics. [Downloadable!]
  3. Thibaud Vergé, 2003. "Portfolio Effects and Merger Control: Full-line Forcing as an Entry Deterrence Strategy," Industrial Organization 0301010, EconWPA. [Downloadable!]
  4. Stephen Law, 2004. "Inter-temporal Tie-ins: A Case for Tying Intellectual Property Through Licensing," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 11(1), pages 3-26, February. [Downloadable!] (restricted)
  5. repec:bep:eapcon:v:2:y:2003:i:1:p:1063-1063 is not listed on IDEAS
  6. Jeffrey Church & Roger Ware, 1998. "Abuse of Dominance under the 1986 Canadian Competition Act," Review of Industrial Organization, Springer, vol. 13(1), pages 85-129, April. [Downloadable!] (restricted)
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