Anticompetitive bundling when buyers compete
We study the profitability of bundling by an upstream firm that licenses technologies to downstream competitors, and that faces competition for one of its technologies. In an otherwise standard ``Chicago-style" model, the existence of downstream competition can make inefficient bundling profita...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
| Published: |
American Economics Association
2023
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| _version_ | 1797112961074987008 |
|---|---|
| author | de Cornière, A Taylor, G |
| author_facet | de Cornière, A Taylor, G |
| author_sort | de Cornière, A |
| collection | OXFORD |
| description | We study the profitability of bundling by an upstream firm that licenses technologies to downstream competitors, and that faces competition for one of its technologies. In an otherwise standard ``Chicago-style" model, the existence of downstream competition can make inefficient bundling profitable. Forcing downstream firms to use an inefficient technology reassures each one that it will face weak competition. This allows the upstream firm to extract more profit through its monopolized technology. A similar logic can make it profitable to degrade interoperability with rival technologies, even without foreclosing competition. Bundling is most profitable when downstream competition is intense and technologies complementary. |
| first_indexed | 2024-03-07T08:10:16Z |
| format | Journal article |
| id | oxford-uuid:dd87637e-51c1-4320-985d-5971e35ef313 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-04-09T03:55:27Z |
| publishDate | 2023 |
| publisher | American Economics Association |
| record_format | dspace |
| spelling | oxford-uuid:dd87637e-51c1-4320-985d-5971e35ef3132024-03-11T16:28:27ZAnticompetitive bundling when buyers compete Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:dd87637e-51c1-4320-985d-5971e35ef313EnglishSymplectic ElementsAmerican Economics Association2023de Cornière, ATaylor, GWe study the profitability of bundling by an upstream firm that licenses technologies to downstream competitors, and that faces competition for one of its technologies. In an otherwise standard ``Chicago-style" model, the existence of downstream competition can make inefficient bundling profitable. Forcing downstream firms to use an inefficient technology reassures each one that it will face weak competition. This allows the upstream firm to extract more profit through its monopolized technology. A similar logic can make it profitable to degrade interoperability with rival technologies, even without foreclosing competition. Bundling is most profitable when downstream competition is intense and technologies complementary. |
| spellingShingle | de Cornière, A Taylor, G Anticompetitive bundling when buyers compete |
| title | Anticompetitive bundling when buyers compete |
| title_full | Anticompetitive bundling when buyers compete |
| title_fullStr | Anticompetitive bundling when buyers compete |
| title_full_unstemmed | Anticompetitive bundling when buyers compete |
| title_short | Anticompetitive bundling when buyers compete |
| title_sort | anticompetitive bundling when buyers compete |
| work_keys_str_mv | AT decornierea anticompetitivebundlingwhenbuyerscompete AT taylorg anticompetitivebundlingwhenbuyerscompete |