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The Microsoft Case: What Can a Dominant Firm Do to Defend Its Market Position?

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  • Benjamin Klein

Abstract

This paper examines the competitive actions taken by Microsoft in its "browser war" with Netscape, most importantly Microsoft's decisions to give away Explorer free of charge, integrate Explorer into its dominant Windows operating system and pay online service providers for exclusive distribution. Consumers benefited significantly from these actions, but the fundamental economic question is whether Microsoft abused its existing market power when competing in this way. A detailed analysis of Microsoft's conduct and the economics of competition for distribution suggests that severe limits placed on Microsoft's behavior would not be welfare.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.15.2.45
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 15 (2001)
Issue (Month): 2 (Spring)
Pages: 45-62

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Handle: RePEc:aea:jecper:v:15:y:2001:i:2:p:45-62

Note: DOI: 10.1257/jep.15.2.45
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References

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  1. Michael D. Whinston, 1989. "Tying, Foreclosure, and Exclusion," NBER Working Papers 2995, National Bureau of Economic Research, Inc.
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Cited by:
  1. Pier Luigi Parcu, 2006. "European dominant position and american monopolization: a unifying approach from basic game theory," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(237), pages 171-192.
  2. Ilir Maçi & Kresimir Zigic, 2008. "Competition Policy and Market Leaders," CERGE-EI Working Papers wp375, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  3. Christian Genthon, 2007. "Can we measure Microsoft's market power ?," Post-Print halshs-00153837, HAL.
  4. Steven J. Davis & Jack MacCrisken & Kevin M. Murphy, 2001. "Economic Perspectives on Software Design: PC Operating Systems and Platforms," NBER Working Papers 8411, National Bureau of Economic Research, Inc.
  5. Pier Luigi Parcu, 2006. "European dominant position and american monopolization: a unifying approach from basic game theory," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 59(237), pages 171-192.
  6. Jonathan B. Baker, 2003. "The Case for Antitrust Enforcement," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 27-50, Fall.
  7. Török, Ádám, 2011. "A dominanciaproblémák tényeinek értelmezése és a közgazdaság-tudományi módszertan
    [Interpretation of the facts of dominance problems and the methodology of economics]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 41-55.
  8. Hoppe, Heidrun C. & Lee, In Ho, 2003. "Entry deterrence and innovation in durable-goods monopoly," European Economic Review, Elsevier, vol. 47(6), pages 1011-1036, December.
  9. Pollock, R., 2007. "The Control of Porting in Two-Sided Markets," Cambridge Working Papers in Economics 0754, Faculty of Economics, University of Cambridge.
  10. Radke, Marc-Peter, 2001. "Law and economics of Microsoft vs. U.S. Department of Justice - New paradigm for antitrust in network markets or inefficient lock-in of antitrust policy?," Violette Reihe Arbeitspapiere 16/2001, Promotionsschwerpunkt "Globalisierung und Beschaeftigung".
  11. Hal R. Varian, 2001. "High-technology industries and market structure," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 65-101.
  12. Leonhard Dobusch & Elke Schü�ler, 2013. "Theorizing path dependence: a review of positive feedback mechanisms in technology markets, regional clusters, and organizations," Industrial and Corporate Change, Oxford University Press, vol. 22(3), pages 617-647, June.
  13. Joshua Wright, 2011. "Does Antitrust Enforcement in High Tech Markets Benefit Consumers? Stock Price Evidence from FTC v. Intel," Review of Industrial Organization, Springer, vol. 38(4), pages 387-404, June.

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