Edited by Einer R. Elhauge
Chapter 5: Tying, Bundling, and Loyalty/Requirement Rebates
Nicholas Economides* I TYING AND BUNDLING: DEFINITIONS Tying of two products (or services) occurs when a seller sells one good on the condition that the buyer buys the other good from that seller: A tying arrangement is ‘an agreement by a party to sell one product but only on the condition that the buyer also purchase a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.’1 Of particular interest are cases when the seller has market power in the tying product (call it product A) which is the one required to be sold with the other (tied) product. The tied product (call it product B) is the one that the buyer has to take to get the tying product. There are many different ways in which the sale of a product can be conditioned on the sale of another. The tie that comes first to mind is the sale of two goods together in a 1:1 ratio or, more generally, in a fixed ratio. But there are also other more sophisticated ways to condition tying. A tying condition may require a certain number of units of the tied good to be bought from the same seller. An even more restrictive condition resulting in a ‘requirements tie’ is an agreement to sell the tying product only if the buyer buys all or most of its requirements of the tied product from that seller. The ‘requirements tie’ conditions pricing on the...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.