IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v15y2001i2p25-44.html
   My bibliography  Save this article

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

Author

Listed:
  • Richard J. Gilbert
  • Michael L. Katz

Abstract

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors, which the combination of Netscape Navigator and the Java programming language potentially could have lowered. Microsoft took actions to eliminate this threat to its operating system monopoly, and some of Microsoft's conduct very likely harmed consumers. While we recognize the risks of the government's proposed structural remedy of splitting Microsoft in two, we are pessimistic that a limited conduct remedy would be effective in this case.

Suggested Citation

  • Richard J. Gilbert & Michael L. Katz, 2001. "An Economist's Guide to U.S. v. Microsoft," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 25-44, Spring.
  • Handle: RePEc:aea:jecper:v:15:y:2001:i:2:p:25-44
    Note: DOI: 10.1257/jep.15.2.25
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.15.2.25
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Whinston, Michael D, 1990. "Tying, Foreclosure, and Exclusion," American Economic Review, American Economic Association, vol. 80(4), pages 837-859, September.
    2. 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.
    3. Zvi Griliches, 1998. "The Search for R&D Spillovers," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 251-268 National Bureau of Economic Research, Inc.
    4. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 19-34, September.
    5. Charles I. Jones & John C. Williams, 1998. "Measuring the Social Return to R&D," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1119-1135.
    6. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
    7. Richard Gilbert, 2000. "Exclusive Dealing, Preferential Dealing, and Dynamic Efficiency," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(2), pages 167-184, March.
    8. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
    9. Michael L. Katz & Carl Shapiro, 1985. "On the Licensing of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 504-520, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Markus Pasche & Sebastian von Engelhardt, 2004. "Volkswirtschaftliche Aspekte der Open-Source-Softwareentwicklung," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 18/2004, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    5. Stephane Verani, 2006. "Open Source Development in a Differentiated Duopoly," Economics Discussion / Working Papers 06-05, The University of Western Australia, Department of Economics.
    6. Pollock, Rufus, 2005. "The Control of Porting in Two-Sided Markets," MPRA Paper 5023, University Library of Munich, Germany, revised Jun 2007.
    7. 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.
    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. Markus Pasche, 2005. "(Self-)Regulation of a Natural Monopoly via Complementary Goods - the Case of F/OSS Business Models," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 18/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. Knittel, Christopher R. & Stango, Victor, 2011. "Strategic incompatibility in ATM markets," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2627-2636, October.
    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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rey, Patrick & Tirole, Jean, 2007. "A Primer on Foreclosure," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 33, pages 2145-2220, Elsevier.
    2. Etro, Federico, 2016. "Research in economics and industrial organization," Research in Economics, Elsevier, vol. 70(4), pages 511-517.
    3. Fumagalli, Chiara & Motta, Massimo, 2020. "Tying in evolving industries, when future entry cannot be deterred," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    4. Jihui Chen & Qiang Fu, 2017. "Do exclusivity arrangements harm consumers?," Journal of Regulatory Economics, Springer, vol. 51(3), pages 311-339, June.
    5. 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.
    6. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.
    7. Stefanadis, Christodoulos, 1998. "Selective Contracts, Foreclosure, and the Chicago School View," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 429-450, October.
    8. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    9. Carlotta MARIOTTO & Marianne VERDIER, 2015. "Innovation and Competition in Internet and Mobile Banking: an Industrial Organization Perspective," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 129-146, 3rd quart.
    10. John Vickers, 2007. "Some Economics of Abuse of Dominance," Economics Series Working Papers 376, University of Oxford, Department of Economics.
    11. Yongmin Chen, 2014. "Refusal to Deal, Intellectual Property Rights, and Antitrust," Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(3), pages 533-557.
    12. Janusz Ordover & Greg Shaffer, 2007. "Exclusionary Discounts," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2007-13, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    13. Evens, Tom, 2010. "Challenging content exclusivity in network industries: the case of digital broadcasting," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 12, International Telecommunications Society (ITS).
    14. Dennis W. Carlton & Robert H. Gertner, 2003. "Intellectual Property, Antitrust, and Strategic Behavior," NBER Chapters, in: Innovation Policy and the Economy, Volume 3, pages 29-60, National Bureau of Economic Research, Inc.
    15. Marie-Noëlle Calès & Laurent Granier & Nadège Marchand, 2012. "Competition between Clearing Houses on the European Market," Post-Print halshs-00959121, HAL.
    16. Benjamin Montmartin & Nadine Massard, 2015. "Is Financial Support For Private R&D Always Justified? A Discussion Based On The Literature On Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 479-505, July.
    17. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: On the Portfolio Effects of Bundling," IDEI Working Papers 574, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2011.
    18. Antonio Nicita & Giovanni Ramello, 2005. "Exclusivity and Antitrust in Media Markets: The Case of Pay-TV in Europe," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(3), pages 371-387.
    19. Jean J. Gabszewicz & Skerdilajda Zanaj, 2008. "Upstream Market Foreclosure," Bulletin of Economic Research, Wiley Blackwell, vol. 60(1), pages 13-26, January.
    20. Farrell, Joseph & Katz, Michael, 2000. "Innovation, Rent Extraction, and Integration in Systems Markets," Department of Economics, Working Paper Series qt15k4v7xb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.

    More about this item

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:15:y:2001:i:2:p:25-44. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.