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Essay on The Microsoft Antitrust Case: An economic view
The Microsoft Antitrust Case: An economic view
Not many have forgotten the courtroom drama of U.S. v. Microsoft, which attracted many almost, exaggerated press notices. Many analysts have portrayed the trial as the pioneering test in the Information Age of antitrust law, which were enacted in the industrial age.
The economics behind the Microsoft antitrust case is a result of the underlying economics in the computer and Internet industries. It is imperative to have a full understanding of how much competition is required and is adequate in these industries, and also how much is beneficial for these industries, and most importantly the form of competition in these industries, and the sources of long-term competition in these industries. The anti trust case involves Microsoft’s attempt to reduce competition by curbing new technologies was specifically based on the specific method by which competition prevails in the computer industry.
The prime focus of the competition prevailing in these industries is Schumpeterian, this due to the tension that exists between the two very different and complex fundamental economic forces. It is the network effects and also the relative desire for achieving standards mean of serving specific market segments in IT industries by a small group of applications development platforms. Moreover, sunk cost of users and applications developers in general will make recognized leading suppliers of the platform technologies secure from competition for the duration of technological and market period.
The effect of antitrust law on research and development and innovation is rather indirect. The antitrust law helps to have an effect on the industrial competition and subsequently on the terms of cooperation existing among firms in these industries. This in turns influence and affects a company’s incentive to invest its huge cash flows in research and development. It will thus direct it’s earning towards development and will strive for productivity growth....
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