Eliana Garces, Dec 20, 2012
After its publication in 1990, Michael Whinston’s article on Tying, Foreclosure, and Exclusion, quickly achieved fame for being the first formal mathematical demonstration that the practice of tying two separate products in a sale had the potential to foreclose competition and could therefore be used for such a purpose. The paper demonstrated that it was possible, under certain conditions, to use the monopoly power in one market to foreclose competitors in another market, as long as that other market had fixed costs to entry and was not perfectly competitive. Whinston’s paper quickly became the reference paper for those who instinctively believed that the commercial tying of two products in different markets could have a harmful effect on consumers. Because this presumption was under heavy assault at the time when the article was published, its results and the arguments it laid out were greeted with particular enthusiasm by some and, in all cases, with a lot of interest.
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