I reflect the case of Microsoft, which was investigated for antitrust behavior. Microsoft is a largest software manufacturing company having one of the highest assessments in the world. It manufactures windows required for an operating system of servers and personal computers. Since 1991 the Microsoft has been examined many times for the violation of antitrust laws particularly for Sharman Antitrust Act. The litigant alleged that the Microsoft distorted its monopoly power on personal computer based on Intel while handling sales of its operating system and web browser. The subject of content was whether Microsoft should be allowed to bundle its internet explorer web browser with its operating system.
It was assumed that it is the bundling of this web browser with its operating system which allowed Microsoft to get victory in the browser wars as copy of internet explorer was available with every window user. Also the problem was whether Microsoft influenced or altered the programming of its applications to give approval to Internet Explorer over web browser of any other third party and restricting options available to consumers in the market . These facts suggests that Microsoft was trying to gain computer software industry since bundling of internet explorer web browser with its operating system might have provided a monopoly power to Microsoft over these product. Costs associated with Anti-trust behavior
The Term Paper on Microsoft And Monopoly Operating System
... accused of "tying-in" an Internet browser into Windows. Microsoft's "tie-in" of its browser (Internet Explorer) with its operating system (Windows 95) is a tie ... It is an elaborately developed Web browser, capable of standing alone and, in fact, was originally sold by Microsoft as a full-featured, ...
Businesses having market power can regulate the market on their own terms. They will have choice to charge any price from the customers. Therefore, they would often charge higher prices from the consumers and produce less as compare to the competitive outcome, causing in net welfare loss for the society. Further, due to lack of competition, firm’s incentive to contribute in innovations or cost reducing technology will get eroded; thereby productivity growth will get disadvantaged. Case for Monopoly
Monopolies are not always bad. For instance, if we have a business with large fixed cost initially but relatively lower variable cost, then having monopoly in such business is good from the point of efficiency. These businesses are characterized as natural monopoly business. In this kind of business, average cost falls if only one firm is operating but if more than one firms are operating, average cost will rise which ultimately increase the price of product produced in these industry. Also if more than one firm is operating, then it might possible that existing firms are not able to bear the cost and therefore shut down the production.
So in such a business, it is good if only one firm is operating i.e. we should have monopoly in such business. An example of business (where monopoly is warranted and is beneficial for the society) is electricity distribution industry. It is a natural monopoly industry because it involves large fixed costs and there are economies of scale over the entire significant range of production. In such business, there is huge cost advantage if only one firm is operating but if there is more than one firm, cost will rise and consumers will have bear burden of this increased cost in the form of increased price. So letting monopoly in such business may actually benefit the society.
References
Mankiw, G N (2006) , Principles of Microeconomics, 4th edition, Cengage Learning. Snyder, C and Nicholson W (2008), Microeconomic Theory: Basic Principles and extensions, 10th edition, Cengage Learning. http://www.stern.nyu.edu/networks/homeworks/Microsoft_Case.pdf http://www.blurtit.com/q458553.html
The Term Paper on International Business Strategies Strategy Firms Global
INTRODUCTION This essay will firstly analyse three principal benefits, namely, earn a greater return on core competencies, realise location economies and realise experience curve effects, and give example to show how they are available to a firm moving from a domestic to an international strategy. Then the second part will respectively discuss the principal influences on the choice between a ...
