Lecture 24 - Lecture 24: Antitrust Policy inefficiency of...

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Lecture 24: Antitrust Policy inefficiency of monopoly antitrust policy United States v. Microsoft Inefficiency of Monopoly A monopoly produces too little output and charges too high a price compared to a competitive market. Antitrust Policy Anti-trust policy is designed to control the growth of monopoly and to prevent undesirable business practices. The Sherman Anti-trust Act (1890) made it illegal for a firm to use monopoly power in one market to enhance its position in another attempt to control a market in all stages of production United States vs. Microsoft The Department of Justices alleges that Microsoft monopolized the market for PC operating systems and leveraged this monopoly power in markets for complementary goods such as browsers. In particular, the allegations fall into three categories 1. monopolization of the market for operating systems for PC's o DOJ needs to show that MS used its monopoly power o typically, this means charging a high price 2. anti-competitive bundling of Internet Explorer with the Windows operating system
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Lecture 24 - Lecture 24: Antitrust Policy inefficiency of...

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