Tying in two‐sided markets with heterogeneous advertising revenues and negative pricing
We offer a theory of anticompetitive tying in two‐sided markets when below‐cost or negative pricing is possible. With the coexistence of two consumer groups (one regarding tying and tied goods as complementary and the other as independent), a tying‐good monopolist may face difficulties in extracting...
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| Vydané v: | Journal of economics & management strategy Ročník 32; číslo 4; s. 757 - 787 |
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| Hlavní autori: | , , |
| Médium: | Journal Article |
| Jazyk: | English |
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Cambridge
Wiley Subscription Services, Inc
01.10.2023
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| ISSN: | 1058-6407, 1530-9134 |
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| Abstract | We offer a theory of anticompetitive tying in two‐sided markets when below‐cost or negative pricing is possible. With the coexistence of two consumer groups (one regarding tying and tied goods as complementary and the other as independent), a tying‐good monopolist may face difficulties in extracting rent under separate sales and wish to use tying to directly capture the large advertising revenue created in the complementary segment. We uncover two distinct mechanisms by which tying raises monopoly profits but reduces social welfare. Our theory of tying can be applied to real‐world antitrust law enforcement, such as the Google Android case. |
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| AbstractList | We offer a theory of anticompetitive tying in two‐sided markets when below‐cost or negative pricing is possible. With the coexistence of two consumer groups (one regarding tying and tied goods as complementary and the other as independent), a tying‐good monopolist may face difficulties in extracting rent under separate sales and wish to use tying to directly capture the large advertising revenue created in the complementary segment. We uncover two distinct mechanisms by which tying raises monopoly profits but reduces social welfare. Our theory of tying can be applied to real‐world antitrust law enforcement, such as the Google Android case. |
| Author | Yoon, So Hye Kim, Sang‐Hyun Hahn, Jong‐Hee |
| Author_xml | – sequence: 1 givenname: Jong‐Hee orcidid: 0000-0002-9112-2200 surname: Hahn fullname: Hahn, Jong‐Hee organization: School of Economics Yonsei University Seoul South Korea – sequence: 2 givenname: Sang‐Hyun orcidid: 0000-0001-6171-5382 surname: Kim fullname: Kim, Sang‐Hyun organization: School of Economics Yonsei University Seoul South Korea – sequence: 3 givenname: So Hye surname: Yoon fullname: Yoon, So Hye organization: Department of Economics Princeton University Princeton New Jersey USA |
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| Cites_doi | 10.1111/j.1467-6451.2010.00426.x 10.1093/ej/ueab024 10.1016/j.ijindorg.2012.03.002 10.2307/2937852 10.1257/mic.20180234 10.2307/3087430 10.2501/JAR-55-2-115-119 10.1111/j.1468-0297.2011.02481.x 10.1257/mic.20150072 10.1162/qjec.2010.125.2.729 10.1080/17441056.2017.1386957 10.1016/j.euroecorev.2019.103303 10.1086/296250 |
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| SubjectTerms | Advertisements Advertising Antitrust laws Law enforcement Markets Monopolies Profits Revenue Sales Social welfare |
| Title | Tying in two‐sided markets with heterogeneous advertising revenues and negative pricing |
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