One Monopoly Is Better Than Two: Antitrust Policy and Microsoft

One Monopoly Is Better Than Two: Antitrust Policy and Microsoft The Department of Justice recent case against Microsoft is that it should not be allowed to aggressively maintain control over the internet browser market with the objective of preventing the internet from becoming the platform that could ultimately destroy Microsoft's operating system market. The aim of this paper is not to attack the Department of Justice case. Rather, it is to argue that for consumers one monopoly dominating both the operating system and applications is better than two separate monopolies. In our model we integrate Cournot's theory of two goods that are jointly used in the production of a third composite good with the fixed-proportion model. Utilizing our model we develop a possible explanation for Microsoft's actions – protection of its monopoly profits in the operating systems package market. Additionally we show that the price of the final product is lower if one firm monopolizes all markets. Consequently, the ordered split-up of Microsoft by Judge Thomas P. Jackson, aiming at creating two separate companies, one that will produce the windows and the other the operating systems, will harm consumers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

One Monopoly Is Better Than Two: Antitrust Policy and Microsoft

Loading next page...
 
/lp/springer_journal/one-monopoly-is-better-than-two-antitrust-policy-and-microsoft-MlBlcq79R2
Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1011100703677
Publisher site
See Article on Publisher Site

Abstract

The Department of Justice recent case against Microsoft is that it should not be allowed to aggressively maintain control over the internet browser market with the objective of preventing the internet from becoming the platform that could ultimately destroy Microsoft's operating system market. The aim of this paper is not to attack the Department of Justice case. Rather, it is to argue that for consumers one monopoly dominating both the operating system and applications is better than two separate monopolies. In our model we integrate Cournot's theory of two goods that are jointly used in the production of a third composite good with the fixed-proportion model. Utilizing our model we develop a possible explanation for Microsoft's actions – protection of its monopoly profits in the operating systems package market. Additionally we show that the price of the final product is lower if one firm monopolizes all markets. Consequently, the ordered split-up of Microsoft by Judge Thomas P. Jackson, aiming at creating two separate companies, one that will produce the windows and the other the operating systems, will harm consumers.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 3, 2004

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from
Google Scholar,
PubMed
Create lists to
organize your research
Export lists, citations
Read DeepDyve articles
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off