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Choi, Jay Pil and Jeon, Doh-Shin
(2016)
A Leverage Theory of Tying in Two-Sided Markets.
TSE Working Paper, n. 16-689
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Abstract
Partly motivated by the recent antitrust investigations concerning Google, we develop a leverage theory of tying in two-sided markets. We analyze incentives for a monopolist to tie its monopolized product with another product in a two-sided market. Tying provides a mechanism to circumvent the non-negative price constraint in the tied product market without inviting an aggressive response as the rival firm faces the non-negative price constraint. We identify conditions under which tying in two-sided markets is profitable and explore its welfare implications. Our mechanism can be more widely applied to any markets in which sales to consumers in one market can generate additional revenues that cannot be competed away due to non-negative price constraints.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | September 2016 |
| Uncontrolled Keywords: | Tying, Leverage of monopoly power, Two-sided markets, Zero pricing, Non-negative pricing constraint |
| JEL Classification: | D4 - Market Structure and Pricing L1 - Market Structure, Firm Strategy, and Market Performance L5 - Regulation and Industrial Policy |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse Capitole |
| Site: | UT1 |
| Date Deposited: | 06 Sep 2016 08:08 |
| Last Modified: | 02 Apr 2021 15:54 |
| OAI Identifier: | oai:tse-fr.eu:30704 |
| URI: | https://publications.ut-capitole.fr/id/eprint/22342 |
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