Preserving Monopoly: Economic Analysis, Legal Standards and Microsoft

Abstract

This paper examines a number of issues in the economics and law of leverage and monopolization through the lens of the Microsoft case. The paper explains how Microsoft's practices can be divided into two categories -- exclusivity and incompatibility. This exclusionary conduct has the effect of preserving its operating system monopoly from the threat of competition, a characterization which does not violate the single monopoly profit theory. After carrying out an economic analysis of this exclusionary conduct, the paper then uses a decision theoretic approach to evaluate alternative legal rules for governing such alleged monopolizing conduct.