Product upgrades and switching costs drive monopolistic tying in durable-goods markets.
This study explores how product upgrades and consumer switching costs affect the tying of products in durable-goods markets. Unlike previous findings, in these settings, tying can increase profits and reduce social welfare when consumer switching costs are present. The research also sheds light on the rationale for leasing in durable-goods markets. Additionally, the study discusses the implications of tying reversibility and antitrust concerns.