Pregunta:
What is tying and why is it anti competitive?
Autor: Hjalmer PedersenRespuesta:
Buyer agrees to buy certain but different products as part of one trade, e.g • Airplanes - replacement parts • Fax, copiers - color catridges • Cars- car parts Buyers can void the tied product by not buying the main product (such as the airplane); but not vice versa. Motives for tying: › Price evasion, for example, by regulating prices -> The company can make profits on the tied product • Protection of goodwill -> For example, flight safety, copiers that always work • "Economics of distribution" • Possibility of price discrimination (low cost of binding product, high price on the tied product ... printer / cartridges) • Increased market power in the tied product • Increase competitors' sunk costs (entry barriers) • Possibility for market sharing by cartels
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