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An Economist's Guide to U.S. v. Microsoft

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  • Gilbert, Richard J
  • Katz, Michael

Abstract

The Microsoft antitrust case focused public attention on the role of antitrust enforcement in preserving the forces of innovation in high-technology markets. Traditionally, regulators focused on whether companies artificially hiked prices or reduced output. Now, they're increasingly likely to look first at whether corporate behavior aids or impedes innovation. In this paper, we examine whether innovation has displaced short-term price effects as the focus of antitrust enforcement by the Department of Justice and the Federal Trade Commission and, to the extent that it has, whether enforcement actions are any different as a result. We also ask whether enforcement actions in the area of intellectual property and innovation have been consistent with the 1995 DOJ/FTC Antitrust Guidelines for the Licensing of Intellectual Property [IP Guidelines]. Finally, we consider whether recent enforcement actions identify key areas in which additional guidance from the Agencies would be desirable. We address these questions first in merger cases and then in non-merger cases.

Suggested Citation

  • Gilbert, Richard J & Katz, Michael, 2001. "An Economist's Guide to U.S. v. Microsoft," Department of Economics, Working Paper Series qt56f8p06q, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  • Handle: RePEc:cdl:econwp:qt56f8p06q
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    References listed on IDEAS

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    Cited by:

    1. Kuroda, Toshifumi & Koguchi, Teppei & Ida, Takanori, 2019. "Identifying the effect of mobile operating systems on the mobile services market," Information Economics and Policy, Elsevier, vol. 46(C), pages 86-95.
    2. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    3. Erwin Blackstone & John Roccili & Joseph Fuhr, 2002. "Winners, Losers, and Microsoft: Competition and Antitrust in High Technology Stan J. Liebowitz and Stephen E. Margolis, 1999, pp. 288," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(4), pages 433-441, December.
    4. Stephane Verani, 2006. "Open Source Development in a Differentiated Duopoly," Economics Discussion / Working Papers 06-05, The University of Western Australia, Department of Economics.
    5. Pollock, Rufus, 2005. "The Control of Porting in Two-Sided Markets," MPRA Paper 5023, University Library of Munich, Germany, revised Jun 2007.
    6. Malerba, Franco & Nelson, Richard & Orsenigo, Luigi & Winter, Sidney, 2008. "Public policies and changing boundaries of firms in a "history-friendly" model of the co-evolution of the computer and semiconductor industries," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 355-380, August.
    7. Katz, Michael L., 2021. "Big Tech mergers: Innovation, competition for the market, and the acquisition of emerging competitors," Information Economics and Policy, Elsevier, vol. 54(C).
    8. Krishnamurthy, Sandeep, 2009. "CASE: Mozilla vs. Godzilla — The Launch of the Mozilla Firefox Browser," Journal of Interactive Marketing, Elsevier, vol. 23(3), pages 259-271.
    9. 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.
    10. Oliver Budzinski & Isabel Ruhmer, 2010. "Merger Simulation In Competition Policy: A Survey," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 277-319.
    11. Claude Crampes & Corinne Langinier, 2009. "Are Intellectual Property Rights Detrimental to Innovation?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 16(3), pages 249-268.
    12. 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.
    13. Knittel, Christopher R. & Stango, Victor, 2011. "Strategic incompatibility in ATM markets," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2627-2636, October.
    14. James E. Prieger & Wei‐Min Hu, 2012. "Applications Barrier To Entry And Exclusive Vertical Contracts In Platform Markets," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 435-452, April.
    15. Zigic, Kresimir & Maçi, Ilir, 2011. "Competition policy and market leaders," Economic Modelling, Elsevier, vol. 28(3), pages 1042-1049, May.
    16. 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.
    17. Ilya Segal & Michael D. Whinston, 2007. "Antitrust in Innovative Industries," American Economic Review, American Economic Association, vol. 97(5), pages 1703-1730, December.
    18. Dennis W. Carlton & Michael Waldman, 2005. "Tying, Upgrades, and Switching Costs in Durable-Goods Markets," NBER Working Papers 11407, National Bureau of Economic Research, Inc.
    19. 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.
    20. 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.
    21. 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.
    22. Niedermayer, Andras, 2013. "On platforms, incomplete contracts, and open source software," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 714-722.
    23. Pollock, Rufus, 2009. "The Control of Porting in Platform Markets," The Journal of Economic Asymmetries, Elsevier, vol. 6(2), pages 155-180.
    24. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    Microsoft; antitrust policy; monopolization; predation; network; L12; L41; K21;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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