Chapter 14-Competitive bundling/Tying When bundling toughtens price competition e firm x takes over firm Z pxz=3, No one wants a computer with no monitor, so firm Y will be out of business. (py =0) Tying can serve as a tool for foreclosing a competing firm However, xz =3<2+2. So foreclosure is not profitable for the tying firm e Wen Cao© Wen Cao 10 When bundling toughtens price competition • Firm X takes over firm Z • pXZ  3, No one wants a computer with no monitor, so firm Y will be out of business. ( pY =0) • Tying can serve as a tool for foreclosing a competing firm. • However, XZ =3<2+2. So foreclosure is not profitable for the tying firm. Chapter 14 - Competitive bundling/Tying