On Holders, Blades and Other Tie-In Sales

Tie-in sales have a bad image because of anti-competitive effects. No-tably, tying contracts allow monopolists to carry over monopoly power into markets where they meet competition. Most of the literature as-sumes a firm being monopolist in one market and facing competition in another. In contrast, we analyze two firms which both are mo-nopolists in one market and competitors in the other. Under such a symmetric structure tying has competitive effects. Tie-in sales may increase the consumers ’ expected utility. By tying their products, the firms insure consumers against uncertain future demand