Final answer:
A tie-in sale is a sales tactic where a consumer must purchase a second product to buy the first, often seen as reducing competition by limiting consumer choice. While generally anticompetitive, it may be acceptable for quality maintenance or when coupled with antitrust law considerations. Bundling, on the other hand, groups products together usually with consumer benefits like discounted pricing.
Step-by-step explanation:
A tie-in sale is a situation where a customer is required to buy one product only if the customer also buys another product. This practice is considered controversial as it may force consumers to purchase additional products that they may not want or need, which are not necessarily beneficial to them. For example, to purchase a popular DVD, a store might mandate the purchase of a specific portable TV model as well. This can reduce competition as it limits the consumer's choices and prevents them from selecting products from the wider market.
Although generally seen as anticompetitive, there are scenarios where tie-in sales could be acceptable. One such instance is when maintaining product quality is at stake. For example, a manufacturer may require that a specific part or accessory be used with their main product to ensure proper functioning and safety, thus tying the purchase of that accessory to the main product. Nevertheless, these practices are closely scrutinized under antitrust laws to protect consumer interests and promote fair competition.
In contrast, bundling is another similar concept where products are sold together, typically offering consumers an advantage, such as a discount. Cable companies, for instance, often offer cable, internet, and phone services together at a lower bundled price compared to purchasing them separately, which can be appealing to consumers.