TYING AS A RESPONSE TO DEMAND UNCERTAINTY

This article examines requirements tying of a competitively supplied g ood to a monopolized good, It expands the set of market conditions in which this instrument is known to be profitable, With heterogeneous, p rivately informed buyers, a firm can profit by trying two goods even w hen the demands for the goods are price independent-providing the dema nds are stochastically dependent. We investigate the profitability of tying as a response to stochastic demand, as well as the effects of ty ing on prices and the extent of the market served.