Economics (Markets)

Regulation and Antitrust Policy

Antitrust policy is likely to play an important role in shaping the world economy . In recent years , more states within the United States , as well as many countries , have taken an active role in antitrust policy With a larger amount of players in the antitrust regulation field , there are likely to be more conflicts as different states follow different policies . The problem is strengthened as commerce becomes more and more global . Lately , AOL sued for alleged damages following from the operations Microsoft took against Netscape , which the courts

found to be anti-competitive . Can Microsoft 's business practices be explained by the market conditions that it faces , as described by the Justice Department and accepted by the judge , or are its practices those of a monopolist behaving badly ? If Microsoft is a monopolist , has it actually exercised its market power ? If it has , has its exercise of that power reached a level that is or should be construed as illegal under the nation 's antitrust laws ? In other words , has Microsoft 's exercise of market power harmed consumers , or just Microsoft 's competitors ? To answer these questions , I will consider the Microsoft case , which offers an ideal opportunity to analyze the issues of federalism in antitrust regulation In the work , I will be concerned mainly with the issue of Microsoft 's monopoly status in the operating system market

Microsoft has some market power to affect price through its control of production of key software products (Scherer 91 . Practically all American firms have market power to one extent or another , and they use the power they have to one degree or another . No firm of any consequence in this country or , for that matter , the world meets the requirements for the absence of market power under a market structure economists call perfect competition . This is understandable because perfect competition is a classroom model of market behavior , or a means economists use for thinking about markets and for making tentative predictions concerning the consequences of changes in markets . It was never intended to describe real-world markets with any reasonable degree of accuracy . All real-world markets , in other words , are necessarily imperfect by the standards of perfect competition . And no company should be judged by idealized conceptual standards . Companies should be judged by more realistic standards , like whether improvements in market structure are possible

Taking a close look at and dissecting the critics ' charges against Microsoft does not mean that Microsoft has always operated with the best of business intentions and manners . Microsoft does seem to be an aggressive competitor operating under the influence of business steroids . It drives hard bargains with its suppliers and buyers apparently not always leaving much on the table for the firms with which it deals , which is hardly all bad for consumers . In fact , in their more venturesome moments , Microsoft 's accusers in and out of the Justice Department not only deride Microsoft for attempting to expand its market but also accuse it of...