Chapter 14-Competitive bundling/Tying Tying and Foreclosure Bundling is often used by competing firms ● Motivation? ° Entry deterrence→> analyzed in Chapter8 Two firms: produce computers, X andY One firm produces monitor, Z(compatible with X&Y) e Two types of consumers 3-Px -pz buys X and Z Ui= 1-PY-PZ busy and z Otherwise 1-Px-Pz buys X and Z U= 3-PY-pz buys Y and 2 Three independent firms 2 兀x=兀y= 2 (px,py,Pz)=(1,1,2),(0,0,3)and(3,3.0)Tying and Foreclosure • Bundling is often used by competing firms. • Motivation? • Entry deterrence  analyzed in Chapter 8 • Two firms: produce computers, X and Y • One firm produces monitor, Z (compatible with X&Y) • Two types of consumers: • Three independent firms: p X  p Y  2, p Z =1;  X   Y   Z =2 (p X  p Y , p Z )=(1,1,2), (0,0, 3) and (3,3,0) © Wen Cao 9 Chapter 14 - Competitive bundling/Tying