As this paper is written there is a landmark court case proceeding in Washington in front of a federal judge. This case involves the charging of the Microsoft Corporation for violating antitrust laws set up by the government to preserve market competition. A general overview of the accusations brought against Microsoft by the Justice Department was given by Hayes in the Scholastic Update article "The U.S. versus Microsoft"(1999). This article explains why the federal government is suing Microsoft and how the government regulates businesses to protect competition.
In order to be able to examine the governments' complaint against Microsoft, it is necessary to understand the importance of competition in the capitalist economic system. In a market with no competition a company does not feel pressure to offer the best products at the lowest possible prices. If a business has no competition within a certain market, then it becomes a monopoly where it produces the entire market supply of a particular good. In
So, is Microsoft violating the Sherman Anti-Trust Act by including their Internet browser in Windows? Although Microsoft owns a very large portion of the operating systems market, they do not have a monopoly. Even with the market power that Microsoft has, they still keep their prices low and continue to improve upon the products they offer. The addition of their Internet browser to Windows was not a ploy by Microsoft to gain a monopoly in the browser market but rather a significant improvement to the Windows product.
the case of a monopoly the firm has very strong market power and the consumer is at the mercy of the producer. Government uses antitrust laws as a means of preventing the abuse of market power. These laws are constructed to prohibit mergers that reduce potential competition as well as forbid anti-competitive market behavior. The suit in question charges Microsoft with the violation of the Sherman Anti-Trust Act which is an Act that makes it illegal to use a monopoly in one area to gain a
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