Jean Tirole, Apr 01, 2005
This primer analyzes factors that make ties more likely either to hurt or to benefit consumers. It first identifies factors that influence where the impact of tying on competition in the tied market stands, ranging from little impact on the rivals’ ability to compete to total exclusion of competitors. Then, after reviewing anticompetitive and efficiency-enhancing motives for tying, it argues that tying should be submitted to a rule of reason standard. Furthermore, tying should not be a distinct offense but considered as one possible mechanism of predation. Like many other corporate strategies that make one’s products attractive to consumers, tying has the potential of hurting competitors, and, therefore, is just one in a large range of strategies that can be employed to prey on them. Finally, the primer discusses the costs and benefits of adopting a predation-based standard.