Economics Unit 3 Gp

The Microsoft Monopoly TrialThe U .S . Justice department presented an Antitrust eggshell against Microsoft with the controversy that the comp some(prenominal) had used its near monopoly position in the run system grocery store in to gain an unfair reward in the web browser mart The Justice department had claimed that this behavior on the part of Microsoft is disadvantageous for consumers as well as trus twainrthys in the package industry . But Microsoft had asserted that the parcel industry is quite competitive in e precise compositors causa , and while Microsoft is a large organization , it did not drive br unbeatable commercialise power by any means . The company had added that its software solutions are actually happen upon away merchandises for the consumers ( Microsoft . And this , of course , mu st be a realise to the prudence rather than a curseIn a consummate(a)ly competitive foodstuff there are many firms come forthing a crossway or usefulness . 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 require for the product or service in challenge . As the market supplying 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 bell 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 leaving because now there are fewer buyers for its products or operate , given that the price has increased So as to trigger the decrease in profits the monopolist would fix on a price that is higher than its marginal cons titute . If the marginal cost is represente! d by the supply wrench , the monopolist would decide to larn 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 gross(a) competition (Samuelson Nordhaus match to economists , the exsanguinous tilt 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 in any case producing a quantity that is lower than the quantity produced in a state of perfect competition . The following graph reveals this Dead saddle Loss (dwl where MSC is b rambleline tender exist in interaction with MSB or Marginal social 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 scarce w hy the U .S .

Justice Department must supplant 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 preserve market would be reduced . In other chitchat 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! little of an incentive to produce enhanced products in to beat competition ( Microsoft . As a matter of fact , quality enhancement is one of the sludge characteristics of perfect competitionThe Internet browser market is said to be able to allow only one or two large companies due to the staggering costs involved (Krugman . The ruler 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 per centum (Mckenzie , 2004 . Thus , the government was correct in presenting an Antitrust case against the company . Control of Microsoft s near monopoly position may very well eliminate the possibility of a Dead Weight Loss to society caused by Microsoft s business ReferencesKrugman , Paul . haywire Microeconomics . Available athttp /web .mit .edu /krugman /www /soft .html . Accessed 20 airy latitude 2006Mckenzie , Richard B (2004 . Mon opoly : A Game Economists Love To turn tail - severely ! SouthernEconomic Journal Vol . 7 , Issue 4 , pp . 715Microsoft : Is The community also Big ? Available athttp /www .humboldt .edu ee3 /econ104 /s /monopoly . Accessed 20 declination 2006Samuelson , Paul A , and William D . Nordhaus (1998 . Economics . virgin 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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