Example of a Monopoly Essay

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Microsoft Antitrust Issues and Investigations

Monopoly conditions can be defined by an array of circumstances that a company can find itself in if it does not have any reasonable competition. These conditions can manifest in a variety of ways and in some cases it is only reasonable to have one company provide goods or services; such as in the case of utilities or internet because these services require massive infrastructure investments to build which creates barriers to entry for other firms in the market. Many of these institutions are regulated by the government to ensure that prices are not raised to an extent that they create a large deadweight loss to society; a price that is higher than the market equilibrium in which marginal revenues equal marginal costs. In the event that a monopoly situation is created, the government can intervene in its operations to attempt to remedy the negative consequences of the situation.

One of the best examples of potential antitrust violations and investigations in the last couple decades can be illustrated with Microsoft's market position. Microsoft has spent 21 years -- more than half its lifetime -- fighting antitrust battles with the U.S. government and it has earned a page in the history books, waging one of the biggest monopoly wars in this country (Chan, 2011).

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The company was almost split up in the early 2000s because the operating system had an unfair advantage in the web browser industry. Since Microsoft is the world's most popular operating system for personal computers, the software that would come bundled with the system would be automatically available to the users. This meant that Microsoft's browser, Internet Explorer, had an unfair advantage against its competitors like Netscape. This was argued to give Microsoft an unfair advantage in the market.

The United States Department of Justice felt that Microsoft was abusing their market power on grounds other than price with its inclusion of the Internet Explorer (IE) web browser in its operating system. In 1994, Microsoft Corporation was sued by the Department of Justice on behalf of the United States for violating §2 of the Sherman Act "…by engaging in monopolization through a series of exclusionary and anticompetitive acts designed to maintain its monopoly power" (The Washington Post, 2000). Furthermore, the company was charged with, among other things, violating the Act by 1) attempting to monopolize the Web browser market, 2) tying its….....

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