An Antitrust Analysis of Bundled Loyalty Discounts

Greenlee, Patrick; Reitman, David; Sibley, David S.

doi:10.2139/ssrn.600799

Cited by 32 publications

(40 citation statements)

References 21 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…A notable exception is Greenlee et al (2008). They show that the incumbent's bundled rebates 8 In Nalebuff's basic model, firms sequentially set prices and bundling deters entry.…”

Section: Relevant Literaturementioning

confidence: 99%

“…An important point is that, with respect to Greenlee et al (2008), we extend the model to endogenize both the dominant firm's choice of bundling strategy (partial mixed, complete mixed, or pure bundling) and the rival firm's product selection (high or low quality). We find that, in this more complex setting, using the proposed price test is socially beneficial compared with the do-nothing scenario, while a predatory pricing test is still not consistent with consumer surplus or welfare maximization.…”

Section: Relevant Literaturementioning

confidence: 99%

“…Greenlee et al (2008) develop the same idea to manage bundled rebates in a model with exogenous quality of firms' products (we further discuss their work in section 2). and all products on a stand-alone basis).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Bundling, Competition and Quality Investment: A Welfare Analysis

2013

View full text Add to dashboard Cite

We show how a monopolist in a primary market uses mixed bundling to extract surplus from quality-enhancing investment by a single-product rival in a complementary market, or even force the rival to provide low quality. In our model, bundling does not hinge on commitment ability.Although we assume that bundling creates efficiency gains, we find that bundling reduces consumer surplus and may reduce social welfare, even if the rival is not foreclosed, and investment is not blockaded. Nonetheless, bundling improves welfare when prevents inefficient investment. We propose to check bundled offers via a price test that controls the monopoly component stand-alone price to preserve efficiencies from both bundling and investment. When the rival invests, the test improves consumer surplus and welfare compared with the 'do-nothing' scenario, or a ban on bundling. The test is not consistent with the predatory pricing framework. Qualitative results hold when we endogenize the bundling strategy. JEL codes: L13, L41

show abstract

“…A notable exception is Greenlee et al (2008). They show that the incumbent's bundled rebates 8 In Nalebuff's basic model, firms sequentially set prices and bundling deters entry.…”

Section: Relevant Literaturementioning

confidence: 99%

Section: Relevant Literaturementioning

confidence: 99%

See 1 more Smart Citation

Bundling, Competition and Quality Investment: A Welfare Analysis

2013

View full text Add to dashboard Cite

show abstract

“…In other non-metering ties, the tie requires each consumer to buy the tied product at an inflated price, but sales of the tied product are not directly related to the usage of the tying product and each buyer purchases multiple units of the tying product over which market power exists; see Nalebuff (2005), Mathewson and Winter (1997), Economides (2012), Burstein (1960), Greenlee, Reitman and Sibley (2008), and Elhauge (2009). Because each buyer has a declining valuation of the tying product with each additional unit purchased, each buyer would enjoy consumer surplus on the tying product if a single profit-maximizing price were charged to that buyer.…”

Section: The Welfare Effects Of Metering Ties I Introductionmentioning

confidence: 99%

“…Such ties are similar to two-part pricing that charges a lump sum for the right to buy the tying product, but such ties create an additional distortion in tied product purchases and can be feasible in situations when two-part pricing is not. Elhauge (2009) and Greenlee, et al (2008) provide conditions under which such ties always lower consumer welfare, and may also reduce total welfare.…”

Section: The Welfare Effects Of Metering Ties I Introductionmentioning

confidence: 99%

The Welfare Effects of Metering Ties

Elhauge¹,

Nalebuff

2015

SSRN Journal

View full text Add to dashboard Cite

Critics of current tying doctrine argue that metering ties can increase consumer welfare and total welfare without increasing output and that they generally increase both welfare measures. Contrary to those claims, we prove that metering ties lower consumer welfare and total welfare unless they increase capital good output. We further provide conditions under which metering ties always harm consumer welfare for all uniform and lognormal distributions of consumable usage rates. Finally, we show that with a lognormal distribution, metering ties also lower total welfare absent a large dispersion in desired usage of the metered good. These findings support current tying doctrine, which presumptively condemns ties with market power absent proof of an offsetting procompetitive justification. JEL Codes: C72, K21, L12, L40, L41, L42.

show abstract

An Equilibrium Selection Theory of Monopolization

Eckert

Klumpp

2017

Southern Economic Journal

View full text Add to dashboard Cite

We develop a duopoly model in which firms compete for the market (e.g., investing in process innovation or product development) as well as in the market (e.g., setting quantities or prices). Competition for the market generates multiple equilibria that differ in the firms’ investment levels, relative size, and profitability. We show that monopolization that affects competition in the market can act as an equilibrium selection device in competition for the market. In particular, it eliminates equilibria that are undesirable for the monopolizing firm, while not generating new equilibria. This result complicates the task of determining whether a firm's dominance in a given market is the result of fair competition or unlawful monopolization. We discuss a number of implications for antitrust policy and litigation, and illustrate these by means of two well‐known antitrust cases.

show abstract

An Antitrust Analysis of Bundled Loyalty Discounts

Cited by 32 publications

References 21 publications

Bundling, Competition and Quality Investment: A Welfare Analysis

Bundling, Competition and Quality Investment: A Welfare Analysis

The Welfare Effects of Metering Ties

An Equilibrium Selection Theory of Monopolization

Contact Info

Product

Resources

About