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Problem 19

What is predatory pricing? How might it reduce co…

02:19
Problem 18

What is a tie-in sale? How might it reduce competition and when might it be acceptable?

Answer

Antitrust laws are the laws and regulations that are imposed by government or authorities to
ensure the increased competitiveness in the market. It also helps observe and control mergers
and acquisition taking place between big or key firms.
Tying sales are those sales where the customer is forced to buy one product if they want to buy
another. Such deals many times customers to buy such products which is not useful for
them or they do not need it, which makes such sales unacceptable, and it also reduces
competition because some company might sell its product by tying sales while others are not
able to. These types of sales are acceptable when the products are related and mostly bought in
bundle and the condition to buy other product is not binding.


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Video Transcript

everyone today. Resolving problem number 18 in Chapter 11 of the text, which asks us to define what it's high in or time sale is, um, to talk about how it reduces competition and then to stay in What's a delusion is so from page 270 over textbooks well, the last second hi type our situations when a customer is required to buy one part only because you're also buys a second product. So that is your definition right there. Let's read on. It says they're controversial because the force customers to purchase a product. Nomar. Actually, what further? The additional required part. It's not necessary advantageous to the customer. Suppose that you purchased a populated, be storing firing, that you also purchased a certain affordable to model. These products are only loosely, really fast. There's no reason to make the purchase of one contribute on the other. Even if a customer were interested in affordable to be the tying to articular model prevents the customers from having the option to select one of one from the news types available in the market. So why is the reduction in competition so it reduces optician? I'm going to abbreviate competition calm. So y'all that reduces competition because buyers with customary I'm on works might just refuse altogether to buy the product. Just say I don't get shorter products. The opportune ology micro well, that just refused to buy the item our product because they can't afford the other time products in the scenario, given, we may not be able to afford a portable TV motto. You know, like if you go to a blockbuster, which they're very few now in the world using one remaining and by popular TV you shouldn't have to also purchase this certain portable TV motto. No, and they're requiring it. Which means it's extra money for the consumer or the buyer. The customer you know you're not gonna wanna beat up because they obviously wells the customer I can't afford and what went before. Wow, that portable to model and that is just found us the other time either or other time products. So that's basically why there's a reduction in competition now. The second part, which is less obvious from our explanation and the example given, is when is it acceptable? That is to say, one our tie in sales acceptable. They seem kind of stupid. You know why they work at all? Really? You think about it. Well, there is one part of a few hours. They're called bundling situations. Bondo situation. I will explain in a second. So fondling situations occur? Why, sorry? All right. Bundling situations occur when? If that's an error. By the way, if you buy one product, you're guaranteed a Lester Ida so that particular hairs were guaranteed a lesser I don't Hey, you may as well take it again. I'm just gonna use item. Always a product. You buy one item, you can t the lesser I. So what makes sense right on bundling situations? Why won't I, you guaranteed and mother, are you? We're gonna take that lesser item. It's lost, right? Even though it's lesser value and worth to us, the zoomer or buyer customers. How do you want to freeze? It is up to you. It's very habit that is basically a rundown on what a tie in sale is out reduces competition and when it is particularly acceptable in abundance. And there you have it. If you guys enjoying my video explanation, please look alike. But next it I hope you'll have the next day. But thanks for tuning in today.

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