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Date:      Mon, 15 Nov 1999 20:01:27 -0800
From:      "Dave Walton" <walton@nordicrecords.com>
To:        "David Schwartz" <davids@webmaster.com>
Cc:        <freebsd-chat@freebsd.org>
Subject:   RE: Judge: "Gates Was Main Culprit"
Message-ID:  <19991116040408.17558.qmail@modgud.nordicrecords.com>

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"David Schwartz" <davids@webmaster.com> writes:

>         When you are dealing with an anti-trust case, you are
> looking to find, and fix, monopoly harm. The theory is that a
> monopoly is capable of doing things that a more competitive
> market would not allow. The three chief types of monopoly harm
> are reduced quality, reduced output, and increased prices.
> 
>         The part that I was talking about was increased prices. So
> the question is, is the price of Windows high because Microsoft
> enjoys a monopoly position and could charge whatever it wants.
> And my answer was, no, because the price of Windows is
> reasonable considering the effort expended to develop it, market
> it, maintain it, support it, and research future developments.


Microsoft considered those factors, calculated a reasonable price, 
and then decided to nearly double that price simply because the 
lack of a competitive market allowed them to.

Paragraph 62:
     Microsoft's actual pricing behavior is consistent with the
     proposition that the firm enjoys monopoly power in the market
     for Intel-compatible PC operating systems. The company's
     decision not to consider the prices of other vendors' Intel-
     compatible PC operating systems when setting the price of
     Windows 98, for example, is probative of monopoly power. One
     would expect a firm in a competitive market to pay much closer
     attention to the prices charged by other firms in the market. [...]


Paragraph 63:
     Finally, it is indicative of monopoly power that Microsoft felt that
     it had substantial discretion in setting the price of its Windows
     98 upgrade product (the operating system product it sells to
     existing users of Windows 95). A Microsoft study from
     November 1997 reveals that the company could have charged
     $49 for an upgrade to Windows 98 =97 there is no reason to
     believe that the $49 price would have been unprofitable =97 but
     the study identifies $89 as the revenue-maximizing price.
     Microsoft thus opted for the higher price. 


Dave


----------------------------------------------------------------------
Dave Walton                                                           
Webmaster, Postmaster                   Nordic Entertainment Worldwide
walton@nordicdms.com                          http://www.nordicdms.com
----------------------------------------------------------------------


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