Competition Policy and the Incentive to Innovate: The Dynamic Effects of Microsoft v. Commission

62 Pages Posted: 16 Jun 2008  

Abstract

Microsoft v. Commission indicates a shift in competition policy at the expense of protections for intellectual property. The case applies "essential facilities" arguments to Microsoft's server operating system and "tying" arguments to its Windows Media Player. The dynamic effects of Microsoft v. Commission pose a substantial risk to the incentive to innovate in several ways. First, mandatory licensing and unbundling of the elements of an invention erode intellectual property rights. Second, the targeting of multinational corporations by the European Union creates barriers to international trade whose impacts extend across the global economy. Third, the interpretation of "abuse of a dominant position" focuses on market outcomes rather than on anticompetitive conduct, thus penalizing successful innovators and rewarding their competitors. Competition policy based on Microsoft v. Commission diminishes the incentive to innovate.

Keywords: Competition Policy, Antitrust, Microsoft v. Commission, Innovation, Intellectual property, International trade, Essential facilities, Multinational corporation, Windows, European Union

JEL Classification: L1, L4, K21, O3

Suggested Citation

Spulber, Daniel F., Competition Policy and the Incentive to Innovate: The Dynamic Effects of Microsoft v. Commission. Northwestern Law & Econ Research Paper No. 08-18. Available at SSRN: https://ssrn.com/abstract=1146451 or http://dx.doi.org/10.2139/ssrn.1146451

Daniel F. Spulber (Contact Author)

Northwestern University - Kellogg School of Management ( email )

606 Leverone Hall
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8675 (Phone)
847-467-1777 (Fax)

Paper statistics

Downloads
639
Rank
32,089
Abstract Views
2,256