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Journal of Economic Perspectives: Vol. 15 No. 2 (Spring 2001)

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An Economist's Guide to U.S. v. Microsoft

Article Citation

Gilbert, Richard J., and Michael L. Katz. 2001. "An Economist's Guide to U.S. v. Microsoft." Journal of Economic Perspectives, 15(2): 25-44.

DOI: 10.1257/jep.15.2.25

Abstract

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors, which the combination of Netscape Navigator and the Java programming language potentially could have lowered. Microsoft took actions to eliminate this threat to its operating system monopoly, and some of Microsoft's conduct very likely harmed consumers. While we recognize the risks of the government's proposed structural remedy of splitting Microsoft in two, we are pessimistic that a limited conduct remedy would be effective in this case.

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Authors

Gilbert, Richard J. (U CA, Berkeley)
Katz, Michael L. (U CA, Berkeley)

JEL Classifications

L86: Information and Internet Services; Computer Software
K21: Antitrust Law
L41: Monopolization; Horizontal Anticompetitive Practices
L51: Economics of Regulation

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