Book Review

Book Review 472 BOOK REVIEW laws because of the potential long-run impact on the incentive to develop new innovations. In the first essay, “Antitrust in Software Markets”, economists Michael Katz and Carl Shapiro argue that current economic analysis is up to the task of explaining how the interaction of network effects on the demand side and high fixed and low marginal costs on the supply side determine market structure and conduct in various software and hardware markets. Moreover, Katz and Shapiro then combine their analysis with the DOJ/FTC Merger Guidelines to demonstrate how these tools can be applied to a wide range of horizontal and vertical issues common to software and hardware markets. The strength of this essay is the completeness of the issues covered and the application of current antitrust economics to recent cases investig- ated by the antitrust enforcement agencies. The one shortcoming is that Katz and Shapiro were unable to comment specifically on the issues in the recent Microscoft litigation because the book was published before the DOJ filed its most recent complaint. Nonetheless, the reader can determine what the key economic issues and implications for antitrust policy would be based on their analysis presented in this essay. Review of Industrial Organization Springer Journals

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Kluwer Academic Publishers
Copyright © 2000 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
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