Exclusivity and Tying in U.S. v. Microsoft: What We Know, and Don't Know
AbstractResearch on capital structure attempts to explain how corporations finance real investment, with particular emphasis on the proportions of debt vs. equity financing. There is no universal theory of the debt-equity choice, and no reason to expect one. But three useful conditional theories are reviewed in this paper. The tradeoff theory says that firms seek debt levels that balance the tax advantages of additional debt against the costs of possible financial distress. The pecking order theory says that the firm will borrow, rather than issuing equity, when internal cash flow is not sufficient to fund capital expenditures. Thus, the amount of debt will reflect the firm's cumulative need for external funds. The free cash flow theory says that dangerously high debt levels will increase value, despite the threat of financial distress. Each of these theories "works" for some firms in some circumstances. More general theories will require a deeper understanding of the financial objectives of corporate managers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 15 (2001)
Issue (Month): 2 (Spring)
Find related papers by JEL classification:
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marvel, Howard P, 1982. "Exclusive Dealing," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 1-25, April.
- B. Douglas Bernheim & Michael D. Whinston, .
96008, Stanford University, Department of Economics.
- B. Douglas Bernheim & Michael D. Whinston, 1996. "Exclusive Dealing," NBER Working Papers 5666, National Bureau of Economic Research, Inc.
- Bernheim, B.D., 1992. "Exclusive Dealing," Harvard Institute of Economic Research Working Papers 1622, Harvard - Institute of Economic Research.
- Choi, Jay Pil, 1996. "Preemptive R&D, Rent Dissipation, and the "Leverage Theory."," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1153-81, November.
- Dennis W. Carlton, 2001. "A General Analysis of Exclusionary Conduct and Refusal to Deal - Why Aspen and Kodak are Misguided," NBER Working Papers 8105, National Bureau of Economic Research, Inc.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
- Dennis W. Carlton & Joshua S. Gans & Michael Waldman, 2007.
"Why Tie A Product Consumers Do Not Use?,"
NBER Working Papers
13339, National Bureau of Economic Research, Inc.
- 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.
- Litan, Robert E. & Shapiro, Carl, 2001.
"Antitrust Policy During the Clinton Administration,"
Competition Policy Center, Working Paper Series
qt45r5r72p, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Robert E. Litan & Carl Shapiro, 2003. "Antitrust Policy During the Clinton Administration," Law and Economics 0303003, EconWPA.
- 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.
- Chiara Fumagalli & Massimo Motta & Lars Persson, 2006.
"Exclusive dealing, entry, and mergers,"
CSEF Working Papers
153, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Fumagalli, Chiara & Motta, Massimo & Persson, Lars, 2005. "Exclusive Dealing, Entry and Mergers," CEPR Discussion Papers 4902, C.E.P.R. Discussion Papers.
- Chiara Fumagalli & Massimo Motta & Thomas Roende, 2009. "Exclusive dealing, entry, and mergers," CSEF Working Papers 225, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- 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.
- David Spector, 2011.
"Exclusive contracts and demand foreclosure,"
RAND Journal of Economics,
RAND Corporation, vol. 42(4), pages 619-638, December.
- John Vickers, 2007. "Some Economics of Abuse of Dominance," Economics Series Working Papers 376, University of Oxford, Department of Economics.
- Gans, Joshua S., 2011. "Remedies for tying in computer applications," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 505-512, September.
- Fumagalli, Chiara & Motta, Massimo & Persson, Lars, 2007. "On the Anticompetitive Effect of Exclusive Dealing when Entry by Merger is Possible," Working Paper Series 718, Research Institute of Industrial Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.