Economics Unit 3 Gp

The Microsoft Monopoly TrialThe U .S . Justice department presented an Antitrust eggshell against Microsoft with the contestation that the comp some(prenominal) had used its near monopoly position in the run transcription grocery store in to gain an unfair reward in the browser mart The Justice department had claimed that this behaviour on the part of Microsoft is disadvantageous for consumers as well as trues in the package industry . But Microsoft had asserted that the software package industry is quite competitive in whatsoever baptistery , and while Microsoft is a large organization , it did not spend a penny br unbeatable trade power by any means . The company had added that its software solutions are actually kerfuffle away merchandises for the consumers ( Microsoft . And this , of course , must be a upbeat to the prudence rather than a curseIn a consummate(a)ly competitive food market there are many firms come forthing a growth or gain . A monopoly , on the contrary , is the provided firm in a particular market . The market charge in the industry is determined by the lend and subscribe to for the product or service in challenge . As the market allow drop-offs , the hurt of the product increases (Samuelson Nordhaus , 1998 A monopoly is in a precise good position to flow supply and thereby increase the hurt 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 monopolist faces a handout because now there are fewer buyers for its products or function , given that the price has increased So as to trip the decrease in profits the monopolist would fix on a price that is higher than its b runline constitute . If the marginal cost is represented by the sup! ply wrench , the monopolist would decide to incur 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 blameless(prenominal) competition (Samuelson Nordhaus match to economists , the dead(a) weight unit 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 similarly producing a quantity that is lower than the quantity produced in a state of perfect competition . The following graph reveals this Dead angle Loss (dwl where MSC is borderline tender woo 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 merely why the U .S .

Justice Department must intervene 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 extend to market would be reduced . In other beat out competitors must be allowed to equally produce innovative solutions in the industry . Besides , if Microsoft s creation were to become the dominant electr onic nedeucerk browser the company itself would have! less of an incentive to produce enhanced products in to beat competition ( Microsoft . As a matter of fact , quality enhancement is one of the suck characteristics of perfect competitionThe Internet browser market is said to be able to allow only one or dickens large companies due to the staggering costs involved (Krugman . The come up court and the appeals court agreed that when they considered the Microsoft gaffe , the company s market share of the operating system market was no less than eighty portion and could exceed ninety five percentage (Mckenzie , 2004 . Thus , the government was correct in presenting an Antitrust case against the company . Control of Microsoft s near monopoly position may very(prenominal) well eliminate the possibility of a Dead Weight Loss to society caused by Microsoft s business ReferencesKrugman , Paul . crackers Microeconomics . Available athttp /web .mit .edu /krugman /www /soft .html . Accessed 20 ethereal latitude 2006Mckenzie , Richard B (2004 . Monopoly : A Game Economists Love To frolic - severely ! SouthernEconomic Journal Vol . 7 , Issue 4 , pp . 715Microsoft : Is The confederacy also Big ? Available athttp /www .humboldt .edu ee3 /econ104 /s /monopoly . Accessed 20 declination 2006Samuelson , Paul A , and William D . Nordhaus (1998 . Economics . spick-and-span York : Irwin McGraw-Hill PAGEPAGE 5 ...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper