Economics Unit 3 Gp

The Microsoft Monopoly TrialThe U .S . Justice department presented an Antitrust eggshell against Microsoft with the aptness that the comp some(prenominal) had used its near monopoly position in the run ashes grocery store in to gain an unfair advantage in the browser mart The Justice part had claimed that this conduct on the part of Microsoft is disadvantageous for consumers as well as dissolutes in the package industry . But Microsoft had asserted that the package industry is quite competitive in both typesetters eccentric , and while Microsoft is a large organization , it did not flip over br unbeatable mart power by any means . The company had added that its software solutions are actually col away merchandises for the consumers ( Microsoft . And this , of course , must be a function to the prude nce rather than a curseIn a consummate(a)ly competitive market place there are many firms come forthing a output or service . A monopoly , on the contrary , is the provided firm in a particular market . The market worth in the industry is determined by the publish and acquire for the product or service in challenge . As the market yield drop-offs , the wrong of the product increases (Samuelson Nordhaus , 1998 A monopoly is in a precise good position to flow supply and thereby increase the worth that it charges for the product or service it provides . And , since it has no competitors , there is no compulsion to decrease the price in to beat arguing (Samuelson NordhausHowever , the monopolizer faces a deprivation because now there are fewer buyers for its products or run , given that the price has increased So as to outset the decrease in profits the monopolist would fix on a price that is higher than its fringy constitute . If the marginal cost is repre sented by the supply wrench , the monopolis! t would decide to germinate a sum that is little(prenominal) than the amount at the intersection of the demand and supply curves , that is , the quantity produced in a state of utter(a) competition (Samuelson Nordhaus match to economists , the light slant down Loss of a monopoly must be borne by the entire economy seeing as the monopoly is charging a price higher than is charged by the intersection of the demand and supply curves in a state of perfect competition , and as well as producing a quantity that is lower than the quantity produced in a state of perfect competition . The following graph reveals this Dead clog Loss (dwl where MSC is b launchline tender cost in interaction with MSB or Marginal sociable Benefit (Samuelson NordhausThe monopolist may decide to slide by increasing the price by reducing the quantity it supplies , and thereby increase the Dead Weight Loss to society (Samuelson Nordhaus . This is just now why the U .S .

Justice Department must supersede to put an end to monopolistic practices in favor of perfect competitionThe Justice Department had claimed that if Microsoft were to gain a monopoly in the browser market , the consumers would be facing a loss in terms of increased prices and reduced supply The Justice Department had also argued that if Microsoft were to become a monopoly innovation in the name market would be reduced . In other chew up competitors must be allowed to equally produce innovative solutions in the industry . Besides , if Microsoft s creation were to become the dominant electronic nedeucerk browser the company itself wo uld have less(prenominal) of an incentive to produce! enhanced products in to beat competition ( Microsoft . As a matter of fact , quality enhancement is one of the withdraw characteristics of perfect competitionThe Internet browser market is said to be able to allow only one or both large companies due to the staggering costs involved (Krugman . The prevail court and the appeals court agreed that when they considered the Microsoft case , the company s market share of the operating system market was no less than eighty portion and could exceed ninety five pct (Mckenzie , 2004 . Thus , the government was correct in presenting an Antitrust case against the company . Control of Microsoft s near monopoly position may precise well eliminate the possibility of a Dead Weight Loss to society caused by Microsoft s business ReferencesKrugman , Paul . giddy Microeconomics . Available athttp /web .mit .edu /krugman /www /soft .html . Accessed 20 aeriform latitude 2006Mckenzie , Richard B (2004 . Monopoly : A Game Economists Love T o lay out - severely ! SouthernEconomic Journal Vol . 7 , Issue 4 , pp . 715Microsoft : Is The union also Big ? Available athttp /www .humboldt .edu ee3 /econ104 /s /monopoly . Accessed 20 declination 2006Samuelson , Paul A , and William D . Nordhaus (1998 . Economics . recent York : Irwin McGraw-Hill PAGEPAGE 5 ...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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