Tying
Categories: Banking
An important skill in both sailing and romance.
Also, an often-illegal marketing strategy. Tying involves connecting the purchase of two unrelated products in different markets. In other words, to get a product they want, a customer has to buy a separate product they...don't.
You run a large drug manufacturer. You’ve developed a new cancer drug. You are the only company offering the treatment, giving you a monopoly. But for every dose of cancer drug a patient wants to buy, you make them buy a case of your stool-loosener. Your only goal is to drive sales of the stool-loosener, which doesn't have any relation to the cancer drug. (In fact, one of the side effects of the cancer drug is a runny rectum.)
Cases of tying aren't always obvious. They can be obscured by the fact that there's a perfectly legal, similar-seeming practice known as bundling. You have to buy a certain amount of data to get a cell phone plan...that's an example of bundling. It's not illegal, because the products are related. It makes sense.
Tying involves a more naked use of market leverage and outright greed. It's a grey line, but tying is considered a monopolistic practice, while bundling is not.
