We develop a leverage theory of tying in markets with network e¤ects. When
a monopolist in one market cannot fully extract the whole surplus from con-
sumers, tying can be a mechanism through which the unexploited consumer
surpluses are used as a demand-side leverage to create a strategic "quasi
installed-base" advantage in another market characterized by network e¤ects.
Our mechanism does not require the commitment assumption with technical
tying. Tying can lead to the exclusion of more effcient rival forms in the tied
market, but expand the tying good market if the latter market is not fully
covered with independent pricing. Welfare implications are also discussed.