Economics Unit 3 Gp

The Microsoft Monopoly TrialThe U .S . Justice department presented an Antitrust eggshell against Microsoft with the leaning that the comp some(prenominal) had used its near monopoly position in the run organization grocery store in to gain an unfair vantage in the web browser mart The Justice segment had claimed that this deportment on the part of Microsoft is disadvantageous for consumers as well as loyals in the package industry . But Microsoft had asserted that the software package industry is quite competitive in both berthful , and while Microsoft is a large organization , it did not commit br unbeatable merchandiseplace power by any means . The company had added that its software solutions are actually flunk away merchandises for the consumers ( Microsoft . And this , of course , must be a der ive to the prudence rather than a curseIn a consummate(a)ly competitive market there are many firms come forthing a harvest or dish up . A monopoly , on the contrary , is the provided firm in a particular market . The market worth in the industry is determined by the bring home the bacon and ask for the product or service in challenge . As the market allow drop-offs , the charge 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 monopoliser faces a qualifying because now there are fewer buyers for its products or serve , given that the price has increased So as to send-off the decrease in profits the monopolist would fix on a price that is higher than its marginal constitute . If the marginal cost is represented by the supp! ly wrench , the monopolist would decide to begin 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 accurate competition (Samuelson Nordhaus match to economists , the doomed weightiness 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 overly producing a quantity that is lower than the quantity produced in a state of perfect competition . The following graph reveals this Dead pitch Loss (dwl where MSC is b lodgeline tender appeal in interaction with MSB or Marginal tender 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 scrimpy why the U .S .

Justice Department must depute 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 continue market would be reduced . In other chew 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 would have slight of an incentiv! e to produce enhanced products in to beat competition ( Microsoft . As a matter of fact , quality enhancement is one of the goop characteristics of perfect competitionThe Internet browser market is said to be able to allow only one or deuce large companies due to the staggering costs involved (Krugman . The linguistic rule 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 part (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 . wacky Microeconomics . Available athttp /web .mit .edu /krugman /www /soft .html . Accessed 20 gossamer latitude 2006Mckenzie , Richard B (2004 . Monopol y : A Game Economists Love To lam - severely ! SouthernEconomic Journal Vol . 7 , Issue 4 , pp . 715Microsoft : Is The familiarity also Big ? Available athttp /www .humboldt .edu ee3 /econ104 /s /monopoly . Accessed 20 declination 2006Samuelson , Paul A , and William D . Nordhaus (1998 . Economics . radical 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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