Tying Arrangements and the Leverage Problem

Bowman,; Ward, Setagaya

doi:10.2307/793947

Cited by 204 publications

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“…In addition to Cournot (1838), he cited theoretical literatures on limit-pricing (e.g., Modigliani 1958), basing-point pricing (e.g., Machlup 1942), and kinked demand curves (e.g., Sweezy 1939), as well as Dorfman and Steiner (1954) on the choice of advertising and product quality by a monopolist. 6 He might also have cited the influential work 6 In contrast, Bain's (1968) contemporaneous text, written in the Harvard tradition and more than twice as long as Stigler's (1968) of Bowman (1957) on tying as price discrimination and the so-called single monopoly profit theorem of Director and Levi (1956).…”

Section: Theory Developmentmentioning

confidence: 99%

“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization

Schmalensee

2012

Rev Ind Organ

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Section: Theory Developmentmentioning

confidence: 99%

“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization

Schmalensee

2012

Rev Ind Organ

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“…Bowman (1957) applied, but the decision was overturned by an appeals court. In response, the FCC adopted its 2010 Open Internet Order.…”

Section: V21 Blocking and Degradationmentioning

confidence: 99%

Competition and antitrust in Internet markets

Haucap

Stühmeier²

2016

Handbook on the Economics of the Internet

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editor. Finally, policy conclusions and further research questions are discussed in the paper's concluding section. Terms of use: Documents inKeywords: Digital markets, Google, E-Book, online markets, net neutrality, vertical restraints + We would like to thank Johannes Bauer for his extremely valuable comments on a draft of this chapter.

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“…This theory was criticized by Chicago School (see e.g. Bowman 1957, Posner 1976, Bork 1978) since the distributor is better off by selling only the desirable movie at a higher price. As an alternative, Stigler (1968) proposed a theory based on price discrimination 9 , which became a dominant strand (Schmalensee, 1984, McAfee et al 1989, Shaffer, 1991, Salinger 1995and Armstrong 1996 at least until Whinston (1990) .…”

Section: Introductionmentioning

confidence: 99%

“…But Kenny and Klein (2000) do not agree with Hanseen's analysis. 10 Armstrong-Vickers (2008) is a bit related to our paper since they consider bundling in a symmetric situation: they study competition between two symmetric firms producing two horizontally differentiated products (i.e. consumers are located in a two-dimensional hotelling space).…”

Section: Introductionmentioning

confidence: 99%

“…As an alternative, Stigler (1968) proposed a theory based on price discrimination 9 , which became a dominant strand (Schmalensee, 1984, McAfee et al 1989, Shaffer, 1991, Salinger 1995and Armstrong 1996 at least until Whinston (1990) . 10 Basically, in Whinston, tying allows an incumbent to commit to be aggressive, which discourages entry if there is a fixed cost of entry. On the contrary, in Jeon-Menicucci (2009), bundling softens competition from rival products and hence it is possible that every firm realizes a (weakly) higher profit when bundling is allowed than when it is prohibited.…”

Section: Introductionmentioning

confidence: 99%

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Bundling and Competition for Slots: Sequential Pricing

Jeon

Menicucci

2009

SSRN Journal

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In this paper we study, as in Jeon-Menicucci (2009), competition between sellers when each of them sells a portfolio of distinct products to a buyer having limited slots. This paper considers sequential pricing and complements our main paper (JeonMenicucci, 2009) that considers simultaneous pricing.First, Jeon-Menicucci (2009) find that under simultaneous individual pricing, equilibrium often does not exist and hence the outcome is often inefficient. By contrast, equilibrium always exists under sequential individual pricing and we characterize it in this paper. We find that each seller faces a trade-off between the number of slots he occupies and surplus extraction per product, and there is no particular reason that this leads to an efficient allocation of slots.Second, Jeon-Menicucci (2009) find that when bundling is allowed, there always exists an efficient equilibrium but inefficient equilibria can also exist due to pure bundling (for physical products) or slotting contracts. Under sequential pricing, we find that all equilibria are efficient regardless of whether firms can use slotting contracts, and both for digital goods and for physical goods. Therefore, sequential pricing presents an even stronger case for laissez-faire in the matter of bundling than simultaneous pricing.

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Tying Arrangements and the Leverage Problem

Cited by 204 publications

References 0 publications

“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization

“On a Level with Dentists?” Reflections on the Evolution of Industrial Organization

Competition and antitrust in Internet markets

Bundling and Competition for Slots: Sequential Pricing

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