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Can we measure Microsoft's market power ?

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Author Info
Christian Genthon () (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II)
Abstract

This paper has the objective of measuring the market power of Microsoft in the software industry. We develop a two tier arguent. Firstly we estimate the scale economies within the industry. We then make the crude hypothesis that a firm's success in this industry is linked to its size, based on the scale argument. We modelise these assumptions and then compare the expected profits and actual profits genereted by Microsoft. The results tend to show that Microsoft has posted profits in excess of those that such a firm is expected to benefit from if it does not have market power.

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Paper provided by HAL in its series Post-Print with number halshs-00153837_v1.

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Date of creation: 2007
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Publication status: Published, Communications & Stratégies, 2007, 65, 127-146
Handle: RePEc:hal:journl:halshs-00153837_v1

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Related research
Keywords: software industry ; scale economies ; Microsoft;

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  1. Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Blackwell Publishing, vol. 35(4), pages 443-56, June. [Downloadable!] (restricted)
  2. Frances A Katrishen & Nicos A Scordis, 1998. "Economies of Scale in Services: A study of Multinational Insurers," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(2), pages 305-323, June. [Downloadable!] (restricted)
  3. Demsetz, Harold, 1982. "Barriers to Entry," American Economic Review, American Economic Association, vol. 72(1), pages 47-57, March. [Downloadable!] (restricted)
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  4. MacDonald, James M & Ollinger, Michael E, 2000. " Scale Economies and Consolidation in Hog Slaughter," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 82(2), pages 334-46, May. [Downloadable!] (restricted)
  5. Benjamin Klein, 2001. "The Microsoft Case: What Can a Dominant Firm Do to Defend Its Market Position?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 45-62, Spring. [Downloadable!] (restricted)
  6. Pleatsikas, Christopher & Teece, David, 2001. "The analysis of market definition and market power in the context of rapid innovation," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 665-693, April. [Downloadable!] (restricted)
  7. Gregory Werden, 2001. "Microsoft's Pricing of Windows and the Economics of Derived Demand Monopoly," Review of Industrial Organization, Springer, vol. 18(3), pages 257-262, May. [Downloadable!] (restricted)
  8. Dennis W. Carlton & Michael Waldman, 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 194-220, Summer.
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  9. Micha Gisser & Mark Allen, 2001. "One Monopoly Is Better Than Two: Antitrust Policy and Microsoft," Review of Industrial Organization, Springer, vol. 19(2), pages 211-225, September. [Downloadable!] (restricted)
  10. Bernard Reddy & David Evans & Albert Nichols & Richard Schmalensee, 2001. "A Monopolist Would Still Charge More for Windows: A Comment on Werden's Reply," Review of Industrial Organization, Springer, vol. 18(3), pages 273-274, May. [Downloadable!] (restricted)
  11. Baumol, William J, 1996. "Predation and the Logic of the Average Variable Cost Test," Journal of Law & Economics, University of Chicago Press, vol. 39(1), pages 49-72, April.
  12. Michael Katz & Richard Gilbert, 2001. "An Economist's Guide to U.S. v Microsoft," Competition Policy Center, Working Paper Series CPC01-019, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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  13. James M MacDonald & Michael E Ollinger, 2000. "Scale Economies and Consolidation in Hog Slaughter," Working Papers 00-03, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  14. Cowie, Jonathan & Riddington, Geoff, 1996. "Measuring the Efficiency of European Railways," Applied Economics, Taylor and Francis Journals, vol. 28(8), pages 1027-35, August. [Downloadable!] (restricted)
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This page was last updated on 2009-12-4.

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