A competitive market consists of many buyers and sellers. Markets thrive because an equilibrium price is established through natural competition and no single buyer or seller can affect that price. Instead both buyer and seller must take the price given by the market based on the dynamics of supply and demand. This competition is healthy and necessary to the economy because it regulates price, production, promotes and motivates innovation and improvement. In comparison, a monopoly dictates its price and quantity based on demand. It has the potential to influence prices and does so to increase profits. Regarding production, a monopolist produces below the demand curve in order to charge higher prices to consumers. Less production and higher prices clearly illustrate the inefficiency of a monopoly and the harm it may cause to the economy.

In order to prevent a handful of monopolies and trusts (another form of monopolization) from controlling the economy, Congress passed the Sherman Anti-Trust Act of 1890. Signed into law by President Benjamin Harrison on July 2, 1890, the law consists of two sections.

Software is to the information age as oil was to the industrial age and as Standard Oil represented its industry so stands Microsoft nearly one hundred years later. Founded in 1975 by Paul Allen and Chairman Bill Gates, Microsoft's Windows operating system is currently being used on 90 percent of the world's personal computers. As early as 1989, The Federal Trade Commission began an antitrust investigation of Microsoft. The agency alleged that Microsoft's pricing policies illegally constrained competition and that it deliberately placed programming codes in its operating system to hinder competing applications. In 1994, though Microsoft claiming it had done no wrong, reached an agreement. The basis of which involved Microsoft's per processor licensing agreements. In order to use the Microsoft platform and to receive a discounted price, hardware vendors agreed to pay royalties to Microsoft for each personal computer containing a certain type of processor, even if the computer used a different operating platform. Microsoft is on trial again. The Department of Justice claiming that Microsoft has violated Sections 1 and 2 of the Sherman Anti-Trust Act. However, there are two sides to the story. CEO Bill Gates is claiming that his company is innocent. Gates and others claim Microsoft's dominance is result of product superiority and continued innovation not conspiracy

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Approximate Word count = 1105
Approximate Pages = 4 (250 words per page double spaced)