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To: RTev who wrote (23611)	11/18/1999 8:25:00 PM
From: Reginald Middleton	Read Replies (1) \| Respond to of 24154

I have to admit, you debate with much more poise, reason and sustenance than many others on this thread (you know who you are:-). It is enjoyable debating with you. I wish I had the time to delve in a little deeper.

To: RTev who wrote (23611)	11/18/1999 11:50:00 PM
From: Gerald R. Lampton	Read Replies (1) \| Respond to of 24154

There will still be room for Microsoft's lawyers to make some interesting arguments in their response to the proposed rulings. They will probably continue to argue (as you have) that even if Microsoft holds "monopoly power" within this narrowly defined "market" that the demand substitutability from external markets so constrains that power that it cannot be considered a de jure monopoly. I think you are right about this. The judge's treatment of the market for operating systems that work on intel-compatible PCs is too narrow. It assumes that one owns or will buy an intel-compatible PC. Of course Microsoft has enormous market power if you make that assumption. However, if you look at it from the point of view of defining the market power of the Intel/Micorsoft duopoly in the market for PC systems, the outcome is a little different. The fact that, as the judge found, Microsoft has kept its prices below profit-maximizing levels in order to spur demand for PCs and the fact that the OEMs are so extremely price sensitive suggests that the demand for PC systems, as distinguished from the demand for Intel PC operating systems among users and vendors of Intel compatible PCs, is price-elastic. Of course, Apple and Sun sell their PC/micro-computers (I hesitate to call a Sun workstation a "PC" although it can do everything a PC does), and that puts some constraints on the Intel/Microosft duopoly. More important, as PC equipment prices drop, the growing proportion of the price of the typical PC that has to go to pay for the OS will exert increasing pressure on Microsoft to drop OS prices. All of these are constraints on Microsoft's market power that one could infer from the evidence, although they certainly do not show that the Intel/Microsoft duopoly is totally devoid of market power in the PC systems market. What they might show, if the Court of Appeals decides it has the power to infer them, is that market power is more fleeting than the judge found and that the law should take that into account. One thing I don't see in the judge's findings is any discussion of how Microsoft's monopoly power has resulted in a reduction in output. It seems to me it would be difficult to do so, since Microsoft price-discriminates, probably as close to perfectly as is possible in the real world. Recall that the judge did find there is no secondary market for Microsoft OS's. But if someone can point out how I've missed this finding, I'd be grateful.