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Bundling and Tying

By  |  October 20, 2014

Posted by Social Science Research Network

Bundling and Tying – Nicholas Economides (New York University – Leonard N. Stern School of Business – Department of Economics)

ABSTRACT: We discuss strategic ways that sellers can use tying and bundling with requirement conditions to extract consumer surplus. We analyze different types of tying and bundling creating (i) intra-product price discrimination; (ii) intra-consumer price discrimination; and (iii) inter-product price discrimination, and assess the antitrust liability that these practices may entail. We also discuss the impact on consumers and competition, as well as potential antitrust liability of bundling “incontestable” and “contestable” demand for the same good.