Jeon, Doh-Shin and Choi, Jay Pil (2021) A leverage theory of tying in two-sided markets with non-negative price constraints. American Economic Journal: Microeconomics, vol. 13 (n° 1). pp. 283-337.

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Identification Number : 10.1257/mic.20180234

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: Article
Language: English
Date: February 2021
Refereed: Yes
JEL Classification: D42 - Monopoly
K21 - Antitrust Law
L12 - Monopoly; Monopolization Strategies
L41 - Monopolization; Horizontal Anticompetitive Practices
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 20 Apr 2020 13:28
Last Modified: 10 Jun 2021 08:01
OAI Identifier: oai:tse-fr.eu:123589
URI: https://publications.ut-capitole.fr/id/eprint/32821

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