Here's part of the problem with the complaints against Microsoft. Computer software, by its nature, is a nonrivalrous good. This means that once the first instance of software exist, multiple copies can be made at either no cost or a negligble cost in the case of computer software. In a fully competitive market, marginal revenue will equal marginal cost which equals price. However, a software company cannot charge nothing for its product and hope to remain in business, so either Microsoft goes out of business, don't celebrate too much, or they have to charge a price higher than marginal cost of production. Another result of computer software being a nonrivalrous good is that the average cost curve for computer software will be downward sloping when it crosses the demand curve. This is an indication that the industry is a natural monopoly, becasue competition cannot exist in equillibrium because eventually if two firms create similar software products, say Windows vs. OS2, there can usually only be one winner, with the loser either going out of business or leaving it as a marginal product with no real market share. Microsoft is a very large software company and is also a natural monopoly. However, as long as there are other companies that attempt to compete or innovate with better products, see Apple, Microsoft will have to keep improving their products to maintain their market share. In the end, the real winners are the consumers because they benefit from this. Another comment about the whole Microsoft case and antitrust laws in general. I cannot understand how these laws can be remotely construed as constitutional. It attempts to punish companies for being to big and successful and to attempt to regulate the amounts of profits that companies can make. As an example, let's look at the Microsoft vs. Netscape case. Microsoft made it very hard for Netscape to compete when it started to bundle its browser with Windows. I'm sure candlemakers were very upset when electricity became widely available too. If Microsoft were to stop bundling the browser with Windows and consumers preferred to buy Netscape instead. This will result in Microsoft's marginal revenue declining. Now, of Microsoft wanted to increase the price for Windows, then losses in revenue will only be attributable to Windows as opposed to both Windows and Explorer. So, with bundling, Microsoft is less likely to increase the price of it's software. Yes, 300$ does seem expensive in relation to other software. However, you tend to use it a lot more than other software, Grand Theft Auto is excluded from this conversation. So, economists can show that the total cost to consumers is less with the bundled software than buying it separately. Consumers are better of with Microsoft bundling the software. Maybe we should try to convince the courts and the legislature to leave economic matters alone because all they can do is screw things up with their own monopolies, Amtrak is a good example.
"Laws are made for the public good...The public good is not to be considered, if it is purchased at the expense of an individual." Lord Acton
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Here's part of the problem with the complaints against Microsoft. Computer software, by its nature, is a nonrivalrous good. This means that once the first instance of software exist, multiple copies can be made at either no cost or a negligble cost in the case of computer software. In a fully competitive market, marginal revenue will equal marginal cost which equals price. However, a software company cannot charge nothing for its product and hope to remain in business, so either Microsoft goes out of business, don't celebrate too much, or they have to charge a price higher than marginal cost of production.
Another result of computer software being a nonrivalrous good is that the average cost curve for computer software will be downward sloping when it crosses the demand curve. This is an indication that the industry is a natural monopoly, becasue competition cannot exist in equillibrium because eventually if two firms create similar software products, say Windows vs. OS2, there can usually only be one winner, with the loser either going out of business or leaving it as a marginal product with no real market share.
Microsoft is a very large software company and is also a natural monopoly. However, as long as there are other companies that attempt to compete or innovate with better products, see Apple, Microsoft will have to keep improving their products to maintain their market share. In the end, the real winners are the consumers because they benefit from this.
Another comment about the whole Microsoft case and antitrust laws in general. I cannot understand how these laws can be remotely construed as constitutional. It attempts to punish companies for being to big and successful and to attempt to regulate the amounts of profits that companies can make. As an example, let's look at the Microsoft vs. Netscape case. Microsoft made it very hard for Netscape to compete when it started to bundle its browser with Windows. I'm sure candlemakers were very upset when electricity became widely available too. If Microsoft were to stop bundling the browser with Windows and consumers preferred to buy Netscape instead. This will result in Microsoft's marginal revenue declining. Now, of Microsoft wanted to increase the price for Windows, then losses in revenue will only be attributable to Windows as opposed to both Windows and Explorer. So, with bundling, Microsoft is less likely to increase the price of it's software. Yes, 300$ does seem expensive in relation to other software. However, you tend to use it a lot more than other software, Grand Theft Auto is excluded from this conversation. So, economists can show that the total cost to consumers is less with the bundled software than buying it separately. Consumers are better of with Microsoft bundling the software. Maybe we should try to convince the courts and the legislature to leave economic matters alone because all they can do is screw things up with their own monopolies, Amtrak is a good example.
"Laws are made for the public good...The public good is not to be considered, if it is purchased at the expense of an individual." Lord Acton