The Welfare Effects of Metering Ties

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The Welfare Effects of Metering Ties

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Title: The Welfare Effects of Metering Ties
Author: Elhauge, Einer Richard; Nalebuff, Barry J.

Note: Order does not necessarily reflect citation order of authors.

Citation: Einer Elhauge & Barry J. Nalebuff, The Welfare Effects of Metering Ties (Harvard John M. Olin Discussion Paper Series Paper No. 822, Apr. 2015).
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Abstract: Critics of current tying doctrine argue that metering ties can increase consumer welfare and total welfare without increasing output and that they generally increase both welfare measures. Contrary to those claims, we prove that metering ties lower consumer welfare and total welfare unless they increase capital good output. We further provide conditions under which metering ties always harm consumer welfare for all uniform and lognormal distributions of consumable usage rates. Finally, we show that with a lognormal distribution, metering ties also lower total welfare absent a large dispersion in desired usage of the metered good. These findings support current tying doctrine, which presumptively condemns ties with market power absent proof of an offsetting procompetitive justification.
Published Version: http://www.law.harvard.edu/programs/olin_center/papers/pdf/Elhauge_822.pdf
Other Sources: http://ssrn.com/abstract=2591577
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:17743077
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