Microsoft has been a giant in the software industry. Can we define Microsoft as a monopoly? Please explain. In addition, whether the Learner Index works well to define the market power for Microsoft in the software industry? Explain your answer.
please help me answer this for managerial econ
http://en.wikipedia.org/wiki/United_States_v._Microsoft
http://www.pcworld.com/article/139458/eight_years_later_is_microsoft_still_a_monopoly.html
http://en.wikipedia.org/wiki/Market_power
To determine whether Microsoft can be defined as a monopoly in the software industry, we need to understand what a monopoly is. A monopoly exists when a single company dominates an entire market, usually due to significant barriers to entry that prevent or limit competition.
While Microsoft has been a dominant player in the software industry, it is not considered a monopoly in the traditional sense because there are other competitors in the market. Microsoft faces competition from companies like Apple, Google, Oracle, IBM, and many others. These companies offer alternative software products and services, creating competition in the industry.
However, it is worth noting that Microsoft has had a history of antitrust lawsuits and regulatory actions. In the past, there were concerns about Microsoft's market power, specifically regarding its bundling of Internet Explorer with its Windows operating system. These actions led to legal challenges and some restrictions being imposed on Microsoft's behavior. These legal actions indicate that there have been instances where Microsoft's market dominance raised antitrust concerns.
Now, in regards to the Learner Index, it is essential to note that there is no standard measure to determine market power precisely. The Learner Index is just one of many measures used to assess market concentration and competitiveness. It measures the market share of the largest firm relative to the combined market shares of the top four firms.
While the Learner Index can provide some insight into market concentration, it may not give a comprehensive picture of market power on its own. Other factors, like barriers to entry, the existence of substitutes, and the ability of firms to set prices independently, should also be considered.
Therefore, solely relying on the Learner Index may not be sufficient to define the market power of Microsoft in the software industry. A more comprehensive analysis, considering various factors, including market structure, competition, and regulatory actions, would be necessary to gauge Microsoft's market power accurately.