Tying and entry deterrence in vertically differentiated markets
AbstractThis paper analyzes tying and bundling as an entry deterrence tool. It shows that a multi-product firm can defend its monopoly position in one market via tying even when it does not have market power in another market. This is shown on a model with two complementary goods, each of which is vertically differentiated and in which consumers’ preferences for the goods are positively correlated. Some possible ways of defending against entry deterrence, and implications for competition policy, are discussed.
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Bibliographic InfoPaper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp266.
Date of creation: Aug 2005
Date of revision:
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Industrial organization; vertical differentiation; anti-trust policy; entry deterrence; foreclosure; tying; bundling.;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-02 (All new papers)
- NEP-ALL-2005-09-11 (All new papers)
- NEP-COM-2005-09-02 (Industrial Competition)
- NEP-COM-2005-09-11 (Industrial Competition)
- NEP-IND-2005-09-02 (Industrial Organization)
- NEP-MIC-2005-09-02 (Microeconomics)
- NEP-MIC-2005-09-11 (Microeconomics)
- NEP-TID-2005-09-02 (Technology & Industrial Dynamics)
- NEP-TID-2005-09-11 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Choi, Jay Pil & Stefanadis, Christodoulos, 2001. "Tying, Investment, and the Dynamic Leverage Theory," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 52-71, Spring.
- Dennis W. Carlton & Michael Waldman, 1998.
"The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries,"
NBER Working Papers
6831, National Bureau of Economic Research, Inc.
- 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.
- Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use Of Tying To Preserve And Create Market Power In Evolving Industries," University of Chicago - George G. Stigler Center for Study of Economy and State 145, Chicago - Center for Study of Economy and State.
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