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Tying by a Non-monopolist

Author

Listed:
  • Eugen Kovac

Abstract

This paper explores tying in the situation where a multi-product firm without monopoly power competes against several single-product firms. I consider two markets: one for a horizontally differentiated good, the other for a homogeneous good. As opposed to the widely accepted opinion that tying may be profitable only in the case of monopoly power, I show that under reasonable assumptions tying is profitable for the multi-product firm and has a negative welfare effect.

Suggested Citation

  • Eugen Kovac, 2004. "Tying by a Non-monopolist," CERGE-EI Working Papers wp225, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp225
    as

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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp225.pdf
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    References listed on IDEAS

    as
    1. Denicolo, Vincenzo, 2000. "Compatibility and Bundling with Generalist and Specialist Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 48(2), pages 177-188, June.
    2. Seidmann, Daniel J, 1991. "Bundling as a Facilitating Device: A Reinterpretation of Leverage Theory," Economica, London School of Economics and Political Science, vol. 58(232), pages 491-499, November.
    3. Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
    4. Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
    5. Oz Shy, 1996. "Industrial Organization: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691795, December.
    6. Vincenzo Denicolo, 2000. "Compatibility and Bundling with Generalist and Specialist Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 48(2), pages 177-188, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Industrial organization; Anti-trust policy; Multi-product firm; Tying; Bundling.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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