The economics of the microsoft case

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 governments case against Microsoft, which is that Microsoft suppressed Schumpeterian competition. Microsofts actions and the resulting effects on the industry can then be assessed to determine whether and how the suppression was harmful to users. 1 Stanford University and NBER. I served as chief economist of the antitrust division in 1999 an