P laystatio n 2 do minated the o riginal xbo x in a

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Unformatted text preview: P enf ield Jackso n declared Micro so f t to be a monopoly (a market where there are many buyers but o nly o ne do minant seller), the co llective respo nse sho uld have been “o f co urse.” Why? The natural state o f a market where netwo rk ef f ects are present (and this includes o perating systems and Of f ice so f tware) is f o r there to be o ne majo r player. Since bigger netwo rks o f f er mo re value, they can charge custo mers mo re. Firms with a co mmanding netwo rk ef f ects advantage may also enjo y substantial bargaining po wer o ver partners. Fo r example, Apple, which co ntro ls o ver 75 percent o f digital music sales, f o r years was able to dictate so ng pricing, despite the tremendo us pro tests o f the reco rd labels.B. Barnes, “NBC Will No t Renew iTunes Co ntract,” New Yo rk Times, August 31, 2007. In f act, Apple’s strangleho ld was so stro ng that it leveraged bargaining po wer even tho ugh the “Big Fo ur” reco rd labels (Universal, So ny, EMI, and Warner) were themselves an oligopoly (a market do minated by a small number o f po werf ul sellers) that to geth...
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This document was uploaded on 01/31/2014.

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