The Microsoft Case: What Can a Dominant Firm Do to Defend its Market Position?

The Journal of Economic Perspectives, Vol. 15, No. 2, Spring 2001

19 Pages Posted: 9 Jul 2011

See all articles by Benjamin Klein

Benjamin Klein

University of California, Los Angeles (UCLA) - Department of Economics; Compass Lexecon

Date Written: 2001

Abstract

This paper examines the competitive actions taken by Microsoft in its "browser war" with Netscape, most importantly Microsoft's decisions to give away Explorer free of charge, integrate Explorer into its dominant Windows operating system and pay online service providers for exclusive distribution. Consumers benefited significantly from these actions, but the fundamental economic question is whether Microsoft abused its existing market power when competing in this way. A detailed analysis of Microsoft's conduct and the economics of competition for distribution suggests that severe limits placed on Microsoft's behavior would not be welfare-enhancing.

JEL Classification: L41, K21

Suggested Citation

Klein, Benjamin, The Microsoft Case: What Can a Dominant Firm Do to Defend its Market Position? (2001). The Journal of Economic Perspectives, Vol. 15, No. 2, Spring 2001. Available at SSRN: https://ssrn.com/abstract=1657704

Benjamin Klein (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

1999 Avenue of the Stars
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Los Angeles, CA 90067-4628
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HOME PAGE: http://www.econ.ucla.edu/people/Faculty/Klein.html

Compass Lexecon ( email )

1999 Avenue of the Stars
Suite 1150
Los Angeles, CA 90067-4628
United States
310-728-2025 (Phone)
310-728-2070 (Fax)

HOME PAGE: http://www.compasslexecon.com/professionals/bio?id=152

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