[tylerdurden]

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Microsoft, AT&T (although I don't know any specifics of that case), but other than that we have been breaking up monopolies since Standard Oil

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AT&T and Standard Oil both benefitted from government protection (AT&T in outright monopolies granted by the state, Standard Oil in huge artificial barriers to entry erected by the state).

Microsoft is quite a different case, which I will address later.

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All that is nessecary for a company to sucessfuly engage in uncompetitive tactics is a significant barrier to entry to make it hard enough for another firm to enter the market that the origonaly company could ride out the storm (as described by the previous poster) each time a firm does.

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And what is that barrier here? PVN corp was able to enter the market.

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No it does not make Imtel evil. In a free market system you have to expect each player to maximize his own personaly utility/profit/welfare. However, the state is in a position (and I would argue has a responsibility) to take each economic actors likely actions into account and set up rules that will maximize the general welfare. In this situation maximizing general welfare means insuring competitive markets.

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The example given was still a competitive market.

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A profit-motivated monopoly will set prices above the social optimum/competitive market equilibrium point and produce an associated lower quantity. Enough consumers will still find these prices acceptable so that the monopoly can make a huge profit, but there will still be a large dead weight loss do to the consumers that would have been willing to pay a cost that is greater than the production of the good but less than the price that a monopoly would set(this is similar to a laborer who decides not to get a job because the tax on his income makes him decide he is better off unemployed). It is therefore in no ones interest (other than the monopolistic firm itself) that a monopoly be allowed to engage in uncompetitive tactics.

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But where's the monopoly? The charges of "high barriers to entry" in this hypothetical don't hold water. Manufacturing (which is widely held as a insurmountable fixed cost in this field) can easily be outsourced to existing chip fabricators (this is routinely done even today).



Going back to Microsoft, if you examine the facts of the case you will find that the suit was not a result of government desire to protect consumers. It was directly a result of microsoft's competitors (mainly Sun and Netscape) attempt to unfairly cripple their more successful competitor, along with bureaucrats out to make a name for themselves.

There's nearly zero barrier to entry in software. There's no manufacturing costs, there are minimal liability concerns (ever read those EULAs?), and with the internet, there are near-zero distribution costs. It's arguably easier to compete in the software field than in any other field. A single guy in a basement can write successfull software, and microsoft can't stop him.