Questions
This page is for any questions about the reading or class discussion
Class 1 - Introduction
Class 2 - Enforcement and Monopolization
Class 3 - The Modern Offense of Monopolization
Class 4 - Monopoly Conduct
Question 1
I'm still stuck on how embedding service in with United Shoe's leases was anti-competitive. I get that the lease was, but what is inherently anti-competitive to other shoe machinery sellers about offering a service with your lease? After all the lease was the industry standard since the civil war. I do get that this clause limited a third party service industry, but I don't understand how it was anti-competitive with regard to other shoe machinery manufacturers.
Answer 1
Consider it as a matter of barriers to entry: What do you need to gather to start selling shoe machinery? If the 70-80% market leader offers only "leases with service included," customers can't price the service separately, and independent service organizations can't easily develop (with max 30% of the shoe machines to service). To get started, the would-be competitor must be able to offer both machines and service.