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Interoperability and market foreclosure in the European Microsoft case

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  • Kuhn, Kai Uwe
  • Van Reenen, John

Abstract

In this paper we discuss some of the most important economic issues raised in European Commission vs. Microsoft (2004) concerning the market for work group servers. In our view, the most important economic issues relate to (a) foreclosure incentives and (b) innovation effects of the proposed remedy. We discuss the economic basis for the Commission’s claims that Microsoft had incentives to exclude rivals in the work group server market through degrading the interoperability of their server operating systems with Windows. We also examine the impact of compulsory disclosure of information on interoperability and argue that the effects on innovation are not unambiguously negative as Microsoft claim. We conclude with some general implications of the case for anti-trust enforcement in high innovation sectors.

Suggested Citation

  • Kuhn, Kai Uwe & Van Reenen, John, 2008. "Interoperability and market foreclosure in the European Microsoft case," LSE Research Online Documents on Economics 4664, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:4664
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    File URL: https://researchonline.lse.ac.uk/id/eprint/4664/
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    References listed on IDEAS

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    1. Bernard Reddy & David Evans & Albert Nichols & Richard Schmalensee, 2001. "A Monopolist Would Still Charge More for Windows: A Comment on Werden," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(3), pages 263-268, May.
    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. Jerry Hausman & Gregory Leonard & J. Douglas Zona, 1994. "Competitive Analysis with Differentiated Products," Annals of Economics and Statistics, GENES, issue 34, pages 143-157.
    4. repec:adr:anecst:y:1994:i:34:p:06 is not listed on IDEAS
    5. Whinston, Michael D, 1990. "Tying, Foreclosure, and Exclusion," American Economic Review, American Economic Association, vol. 80(4), pages 837-859, September.
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    Cited by:

    1. Seifert, Jacob, 2013. "Compulsory Licensing, Innovation and Welfare," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79778, Verein für Socialpolitik / German Economic Association.
    2. Ari Bronsoler & Joseph Doyle & John Van Reenen, 2021. "The impact of healthcare IT on clinical quality, productivity and workers," CEP Discussion Papers dp1801, Centre for Economic Performance, LSE.
    3. Sjaak Hurkens & Doh-Shin Jeon & Domenico Menicucci, 2019. "Dominance and Competitive Bundling," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 1-33, August.
    4. Ari Bronsoler & John Van Reenen & Joseph Doyle, 2022. "The Impact of Health Information and Communication Technology on Clinical Quality, Productivity, and Workers," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 23-46, August.

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    Keywords

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    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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