Tying products can be a profitable strategy for facilitating price discrimination only when:

Question

Quizplus · Accepted Answer

Tying products can be a profitable strategy for facilitating price discrimination when the demands for the goods are related. This is because it allows for the seller to leverage the demand for the more popular product to increase sales of the complementary product. Additionally, tying can be used to segment the market and charge different prices to different groups of customers based on their willingness to pay for the bundle. Factors such as the supply of the products and the level of competition in the market are not necessarily relevant to the decision to implement tying.

Tying Products Can Be a Profitable Strategy for Facilitating Price