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An Expensive Pig in a Poke: Estimating the Costs of the District Court's Proposed Breakup of Microsoft

39 Pages Posted: 4 Nov 2000  

Stan J. Liebowitz

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Date Written: September 21, 2000

Abstract

This paper analyzes some consequences of the district courts proposed remedy. Due to changes in pricing strategies and/or the double marginalization problem, prices for operating systems and applications are likely to rise. I estimate what these extra costs to consumers might be. My best guess (actually quite conservative) is $120 billion worldwide over 3 years, although it could be over $300 billion. I also note that the remedy decreases competition in several important markets, including high end servers and game consoles. The paper also includes an analysis of how the remedy is likely to be interpreted.

JEL Classification: L4, L5, L21, O3

Suggested Citation

Liebowitz, Stan J., An Expensive Pig in a Poke: Estimating the Costs of the District Court's Proposed Breakup of Microsoft (September 21, 2000). Available at SSRN: https://ssrn.com/abstract=244579 or http://dx.doi.org/10.2139/ssrn.244579

Stan J. Liebowitz (Contact Author)

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

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Richardson, TX 75080
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HOME PAGE: http://www.utdallas.edu/~liebowit/

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