Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, January 26, 2011

Tying, Bundling, and Loyalty/Requirement Rebates

Posted by D. Daniel Sokol

Nic Economides (NYU - Stern School of Business) has a chapter on Tying, Bundling, and Loyalty/Requirement Rebates.

ABSTRACT: I discuss the impact of tying, bundling, and loyalty/requirement rebates on consumer surplus in the affected markets. I show that the Chicago School Theory of a single monopoly surplus that justifies tying, bundling, and loyalty/requirement rebates on the basis of efficiency typically fails. Thus, tying, bundling, and loyalty/requirement rebates can be used to extract consumer surplus and enhance profit of firms with market power. I discuss the various setups when this occurs.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/01/tying-bundling-and-loyaltyrequirement-rebates.html

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