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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator
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To: Gerald R. Lampton who wrote (20096)6/18/1998 11:26:00 AM
From: Bearded One  Read Replies (2) of 24154
 
But the antitrust answer to this, I would argue, is that this is OK, because integration
adds features for which consumers do not have to pay. It's essentially a rebate of
Microsoft's monopoly profits back to consumers in the form of more functional
products.

Maybe that's the Chicago school antitrust argument. But it doesn't make sense (or needs further explanation) even on its face.
1) Of course consumers have to pay. Microsoft simply raises (or doesn't lower) its prices to cover the cost of the integrated technology.
2) A fundamental problem with these anti-antitrust arguments is that they seem to assume an economic model in a vacuum. For example, I don't believe that Microsoft is maximizing its profits on Windows. I believe that Microsoft could easily raise the price of Windows to double or triple its current cost. After all, would there be a 50% difference in sales of $1000 PC's vs. $1100 or $1200 PC's? Why doesn't it? Probably because of antitrust law and sentiment. So the Chicago school gets to make all these statements about monopolies beinng ok, but its the threat of legal action which is what truly is benefiting the consumers in this case. But this under-pricing of Windows gives Microsoft a lot of room to move its prices around to cover costs of integrating without kicking in competitive forces. That's the benefit of a monopoly-- you make so much money, you can preserve your power just by not trying to take it all at once.

Basically, Microsoft considers many many factors when deciding what to put in its products and what to charge for them. Only some of these factors are pure economic considerations. I see no reason why we should only consider pure short-term economic factors in deciding how to deal with Microsoft.
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