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- Title
The Competition and Welfare Analysis for Operation Systems and Built-in Application Software.
- Authors
Hui-Ling Liu
- Abstract
Microsoft integrated Internet Explorer (IE) web browser into Windows operation system as a built-in application software. In the literatures, the economists usually take the viewpoint that Microsoft abuse his monopoly power in the market of personal computer operation systems and engage in unfair competition with Netscape, his major rival, in the internet browser software market. However the scenarios have changed if the number of built-in application software in the operation systems was a strategic competition behavior. This paper studies the optimal number of built-in application software for monopoly and duopoly operation system market and the social welfare impact for market structure change. Under the Bertrand competition setup, it is possible that the optimal number for monopoly firm is larger than the incumbent firm of duopoly case. The social welfare of duopoly case is definitely larger than the monopoly case. Under the Counot competition setup, the social welfare of duopoly case would reduce when the consumers' preference degree is lower for built-in software of incumbent firm. Comparing the optimal number of built-in application software, quantity competition case is larger than price competition case while the consumers' preference degree is lower for built-in software of incumbent firm. On the contrary, the optimal number of Bertrand competition setup is larger than of Cournot competition setup at the case that the consumers' preference degree is higher for built-in software of incumbent firm.
- Publication
Soochow Journal of Economics & Business, 2010, p89
- ISSN
0259-3769
- Publication type
Article