SIEPR Policy
paper No. 00-50
The Economics of the Microsoft Case
Timothy F. Bresnahan
August 2001
The purpose of this paper is to clarify what Microsoft did wrong that warranted
the antitrust case brought against it, and why its actions were detrimental to the welfare of
users of computers. An accurate understanding of the economics of the industry is a
crucial foundation for following the logic of the government's case against Microsoft,
which is that Microsoft suppressed Schumpeterian competition. Microsof's actions and
the resulting effects on the industry can then be assessed to determine whether and how
the suppression was harmful to users.
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