Document Type
Article
Publication Date
2001
ISSN
0003-6056
Publisher
American Bar Association, Section of Antitrust Law
Language
en-US
Abstract
This paper offers a decision theoretic framework for analyzing tying law, and presents a critical assessment of post-Chicago tying theory. The decision theoretic framework takes into account the likelihood of judicial error in the application of rules and the costs of such error. We use the decision theoretic framework to assess the proper legal rules regarding tying and technological integration. Three general themes run throughout much of our analysis. First, the per se rule against tying simply has no economic foundation. Second, while the post-Chicago literature established the theoretical possibility of anticompetitive tying, one must know the frequency of anticompetitive tying to formulate a rational legal rule. Because beneficial tying is so pervasive, rules against tying could be harmful even with a small rate of "false convictions." Third, the most plausible post-Chicago theory of anticompetitive tying is based on the assumption that the tying and tied goods are complementary and that they are both susceptible to market power. However, the long-established principle that integrated complementary monopoly results in lower prices than independent complementary monopolies suggests that a policy biased toward independent complementary monopolies has the predictable consequence of reducing consumer welfare.
Recommended Citation
Keith N. Hylton & Michael Salinger,
Tying Law and Policy: A Decision Theoretic Approach
,
in
69
Antitrust Law Journal
469
(2001).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/786
Working paper available on SSRN
Comments
Updated with published version of paper on 9/24/22
Working paper available on SSRN