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Bundling, tying and collusion

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  • David Spector

    (PJSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

Tying a good produced monopolistically with a complementary good produced in an oligopolistic market in which there is room for collusion can be profitable if some buyers of the oligopoly good have no demand for the monopoly good. The reason is that a tie makes part of the demand in the oligopolistic market out of the reach of the tying firm's rivals, which decreases the profitability of deviating from a collusive agreement. Tying may thus facilitate collusion. It may also allow the tying firm to alter market share allocation in the collusive oligopolistic market.

Suggested Citation

  • David Spector, 2006. "Bundling, tying and collusion," PSE Working Papers halshs-00590553, HAL.
  • Handle: RePEc:hal:psewpa:halshs-00590553
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00590553
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    References listed on IDEAS

    as
    1. 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.
    2. Harrington, Joseph Jr., 1989. "Collusion among asymmetric firms: The case of different discount factors," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 289-307, June.
    3. Whinston, Michael D, 1990. "Tying, Foreclosure, and Exclusion," American Economic Review, American Economic Association, vol. 80(4), pages 837-859, September.
    4. Carbajo, Jose & de Meza, David & Seidmann, Daniel J, 1990. "A Strategic Motivation for Commodity Bundling," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 283-298, March.
    5. Chen, Yongmin, 1997. "Equilibrium Product Bundling," The Journal of Business, University of Chicago Press, vol. 70(1), pages 85-103, January.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mohammad Arzaghi & Ernst R. Berndt & James C. Davis & Alvin J. Silk, 2008. "Economic Factors Underlying the Unbundling of Advertising Agency Services," NBER Working Papers 14345, National Bureau of Economic Research, Inc.
    2. Edmond Baranes, 2006. "Bundling and Collusion on Communications Markets," Working Papers 06-17, NET Institute, revised Oct 2006.
    3. David Gill & John Thanassoulis, 2013. "Competition in Posted Prices With Bargaining," Economics Series Working Papers 639, University of Oxford, Department of Economics.
    4. Jungwoo Shin & Chang Seob Kimi & Jongsu Lee, 2009. "Model for Studying Commodity Bundling with a Focus on Consumer Preference," TEMEP Discussion Papers 200934, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    5. Begoña Garcéa-Mariñoso & Xavier Martínez-Giralt & Pau Olivella, 2008. "Bundling in Telecommunications," Working Papers 356, Barcelona Graduate School of Economics.
    6. Jong-Hee Hahn & Sang-Hyun Kim, 2016. "Interfirm Bundled Discounts as a Collusive Device," Journal of Industrial Economics, Wiley Blackwell, vol. 64(2), pages 255-276, June.
    7. Juan-Pablo Montero & Esperanza Johnson, 2012. "Multimarket Contact, Bundling and Collusive Behavior," Documentos de Trabajo 420, Instituto de Economia. Pontificia Universidad Católica de Chile..
    8. Baranes, Edmond & Podesta, Marion & Poudou, Jean-Christophe, 2016. "Mixed bundling may hinder collusion," Research in Economics, Elsevier, vol. 70(4), pages 638-658.
    9. repec:eee:jebusi:v:94:y:2017:i:c:p:15-31 is not listed on IDEAS

    More about this item

    Keywords

    bundling; tying; collusion; ventes liées;

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