Abstract
Illegal tying often occurs when a monopolist jointly sells a product with a complementary requirement, also sold competitively. Along with selling the complement at its competi tive price, this paper shows that profit can increase when a monopoli st lets consumers bundle any amount of the requirement with the basic product at a fixed price. Examples illustrate demand conditions that enhance the profitability of this nonlinear price strategy and show that profits can approximate those earned from tying. As a noncoerciv e option to buyers, legal entanglements are avoided. Certain nonlinea r schedules can be Pareto superior to the most profitable uniform pri ces. Copyright 1988 by The London School of Economics and Political Science.
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