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Operating System Prices In The Home Pc Market

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  • Jerome Foncel
  • Marc Ivaldi

Abstract

Because the demand for OS is a derived demand revealed through the demand for PCs and because its elasticity is relatively small, the profit‐maximizing price of DOS/WIN that would result from a static equilibrium is much higher than the observed price. We investigate this assertion empirically by fitting a differentiated‐products model of the home PC market to panel data of all PC brands sold in the G7 countries over the period 1995–1999. The results confirm that the low value of the aggregate elasticity of demand for PCs is the result of differentiation and substitution among PCs.

Suggested Citation

  • Jerome Foncel & Marc Ivaldi, 2005. "Operating System Prices In The Home Pc Market," Journal of Industrial Economics, Wiley Blackwell, vol. 53(2), pages 265-297, June.
    • Handle: RePEc:bla:jindec:v:53:y:2005:i:2:p:265-297
    DOI: 10.1111/j.0022-1821.2005.00254.x
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    1. repec:aei:rpbook:53444 is not listed on IDEAS
    2. ANDERSON, Simon P. & de PALMA, André & THISSE, Jacques-François, 1992. "Interpretations of the logit discrete choice models and the theory of product differentiation," LIDAM Reprints CORE 1017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Wegberg,Marc,van, 1998. "Evolution and Competition in the Market for Handheld Computers," Research Memorandum 003, Maastricht University, Netherlands Institute of Business Organization and Strategy Research (NIBOR).
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    Cited by:

    1. Bonnet, Céline & Richards, Timothy J., 2016. "Models of Consumer Demand for Differentiated Products," TSE Working Papers 16-741, Toulouse School of Economics (TSE).
    2. Ivaldi, Marc & Lörincz, Szabolcs, 2005. "A Full Equilibrium Relevant Market Test: Application to Computer Servers," IDEI Working Papers 341, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. John Van Reenen, 2006. "The Growth of Network Computing: Quality-Adjusted Price Changes for Network Servers," Economic Journal, Royal Economic Society, vol. 116(509), pages 29-44, February.
    4. Ginger Zhe Jin & Zhentong Lu & Xiaolu Zhou & Lu Fang, 2021. "Flagship Entry in Online Marketplaces," NBER Working Papers 29239, National Bureau of Economic Research, Inc.
    5. Ivaldi, Marc & Zhang, Jiekai, 2015. "Advertising competition in the French free-to-air television broadcasting industry," TSE Working Papers 15-578, Toulouse School of Economics (TSE), revised Apr 2018.
    6. Christos Genakos & Kai‐Uwe Kühn & John Van Reenen, 2018. "Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets," Economica, London School of Economics and Political Science, vol. 85(340), pages 873-902, October.
    7. Bonnet, Céline, 2007. "Économétrie de la concurrence entre produits différenciés : théorie et méthodes empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(4), pages 555-580, décembre.
    8. Ivaldi, Marc & Toru-Delibaşı, Tuba, 2018. "Competitive impact of the air ticket levy on the European airline market," Transport Policy, Elsevier, vol. 70(C), pages 46-52.
    9. Van Reenen, John, 2004. "Is there a market for work group servers? Evaluating market level demand elasticities using micro and macro models," LSE Research Online Documents on Economics 773, London School of Economics and Political Science, LSE Library.
    10. Cremer, Helmuth & Muller-Vibes, Catherine, 2022. "Cost of the mission of transport and delivery of printed press: theory and evidence," TSE Working Papers 2022-1353, Toulouse School of Economics (TSE).
    11. Ivaldi, Marc & Sokullu, Senay & Toru-Delibasi, Tuba, 2015. "Airport Prices in a Two-Sided Market Setting: Major US Airports," TSE Working Papers 15-587, Toulouse School of Economics (TSE).

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