Jeon, Doh-Shin, Choi, Jay Pil
and Whinston, Michael Dennis
(2024)
Tying with Network Effects.
TSE Working Paper, n. 1524, Toulouse
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Abstract
We develop a leverage theory of tying in markets with network effects. When
a monopolist in one market cannot perfectly extract surplus from consumers,
tying can be a mechanism through which unexploited consumer surplus is used
as a demand-side leverage to create a “quasi-installed base” advantage in another
market characterized by network effects. Our mechanism does not require any
precommitment to tying; rather, tying emerges as a best response that lowers the
quality of tied-market rivals. While tying can lead to exclusion of tied-market
rivals, it can also expand use of the tying product, leading to ambiguous welfare
effects.
Item Type: | Monograph (Working Paper) |
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Language: | English |
Date: | April 2024 |
Place of Publication: | Toulouse |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Institution: | Université Toulouse Capitole |
Site: | UT1 |
Date Deposited: | 12 Apr 2024 09:39 |
Last Modified: | 12 Apr 2024 09:39 |
OAI Identifier: | oai:tse-fr.eu:129287 |
URI: | https://publications.ut-capitole.fr/id/eprint/49299 |