On Stability in Competition: Tying and Horizontal Product Differentiation

We combine Hotelling’s model of product differentiation with tie-in sales. A monopolist in one market competes with another firm in a second market. In equilibrium firms choose zero product differentiation. Due to the tying structure no firm can gain the whole market by a small price reduction. A differentiation effect due to tie-in sales leads to this equilibrium stability. Copyright Springer Science+Business Media, LLC 2007

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Year of publication:	2007
Authors:	Egli, Alain
Published in:	Review of Industrial Organization. - Springer. - Vol. 30.2007, 1, p. 29-38
Publisher:	Springer
Subject:	Horizontal product differentiation \| Hotelling \| Tie-in sales \| Equilibrium existence

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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