The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries
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NBER Working Paper No. 6831
Issued in December 1998
NBER Program(s): IO
This paper investigates how the tying of complementary products can be used to preserve and extend monopoly positions. We first show how a firm that is a monopolist of a product in the current period can use tying to preserve its monopoly position in future periods. We then show using related arguments how a monopolist in one market can employ tying to extend its monopoly position into a newly emerging market. The analysis focuses on the importance of entry costs and network externalities. The paper includes a discussion of antitrust implications.
Published: Carlton, Dennis W. and Michael Waldman. "The Strategic Use Of Tying To Preserve And Create Market Power In Evolving Industries," Rand Journal of Economics, 2002, v33(2,Summer), 194-220.
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