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Contribution to Book
Tying, Bundling, and Loyalty/Requirement Rebates
Research Handbook on the Economics of Antitrust Law (2010)
  • Nicholas Economides, New York University
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.

Keywords
  • tying,
  • ties,
  • bundling,
  • bundled rebates,
  • loyalty discounts,
  • loyalty requirement rebates,
  • single monopoly surplus,
  • monopolization,
  • market power,
  • foreclosure,
  • antitrust
Publication Date
December 23, 2010
Editor
Einer Elhauge
Publisher
Edward Elgar Publishing
Citation Information
Nicholas Economides. "Tying, Bundling, and Loyalty/Requirement Rebates" Research Handbook on the Economics of Antitrust Law (2010)
Available at: http://works.bepress.com/economides/40/