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On Holders, Blades and Other Tie-In Sales

Author

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  • Alain Egli

Abstract

Tie-in sales have a bad image because of anti-competitive effects. Notably, tying contracts allow monopolists to carry over monopoly power into markets where they meet competition. Most of the literature assumes a firm being monopolist in one market and facing competition in another. In contrast, we analyze two firms which both are monopolists in one market and competitors in the other. Under such a symmetric structure tying has competitive effects. Tie-in sales may increase the consumers' expected utility. By tying their products, the firms insure consumers against uncertain future demand

Suggested Citation

  • Alain Egli, 2004. "On Holders, Blades and Other Tie-In Sales," Diskussionsschriften dp0417, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp0417
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    References listed on IDEAS

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    6. M. L. Burstein, 1988. "A Theory of Full-line Forcing," Palgrave Macmillan Books, in: Studies in Banking Theory, Financial History and Vertical Control, chapter 11, pages 156-192, Palgrave Macmillan.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Tie-in sales; leverage theory of tying; competition; expected utility;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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