Tying in Two-Sided Markets with Multi-Homing

Competition Policy and Antitrust and Networks, the Internet, and Cloud Computing

Article Snapshot


Jay Pil Choi


NET Institute Working Paper #06-04, 2006


This paper asks whether consumers’ willingness to buy several similar products affects competition.

Policy Relevance

Regulators will over-burden basic technology with costly regulation to control monopoly if they overlook how users and markets bypass limits on their choices.

Main Points

  • Firms can require consumers to buy product Y when the consumer buys product X, even if the consumer didn’t want Y (“tying”).

  • Products used by two different groups make “two-sided markets.” Microsoft’s Windows is used by software developers and by consumers: Windows is a “two-sided platform.”

  • The paper shows how both groups of users respond to tying of X and Y in two-sided markets:
    • Consumers buy competing product Z, even if it is similar to Y. Microsoft sold its Media Player along with Windows, but many consumers also have Adobe’s RealPlayer.
    • Content providers make products that work with both Y and Z.
    • The tying firm looks for more content that works only with Y. Consumers benefit from more choice.

Get The Article

Find the full article online

Search for Full Article