Question
Many automobile manufacturers offer an extended warranty on their vehicles.Typically, in order for the warranty to remain valid, the manufacturer requires that any replacement parts
Many automobile manufacturers offer an extended warranty on their vehicles.Typically, in order for the warranty to remain valid, the manufacturer requires that any replacement parts the consumer purchases for their vehicle be OEM parts (parts produced by the original automobile manufacturer).If a consumer purchases and uses replacement parts produced by any other supplier, the warranty will be declared void and canceled.
What do we call this firm practice illustrated in the above example?Briefly discuss two possible reasons the automobile manufacturers may employ this practice:one based on anticompetitive objectives and one based on facilitation of a particular pricing strategy with no anticompetitive intent.
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