Monopolies Essay Example | Topics and Well Written Essays - 500 words - 1

Monopolies - Essay Example However the others were considered of poor quality by Microsoft. There then arose a question of whether Microsoft had altered its applications to favor internet explorer over other browsers. The defendant was also accused of forming restrictive licensing agreements with other original equipment manufacturers which was a bad code of conduct. In its defense, Microsoft argued that Microsoft windows and internet explorer were combined so as to enhance innovation and competition therefore, the two became a same product which facilitated consumers to get all the benefits of internet explorer free of charge. This was contrary to the plaintiffs who argued that the browser was a distinct product which did not require combination with the operating system. Monopoly market structure is a market in which there is a single supplier of a product (Boyes & Melvin, 2008). The firm is referred to as a monopolist and its product has no close substitutes. Boyes & Melvin further pointed out that† a firm that has monopoly power is a price maker rather than a price taker† (p.567). The characteristic here is that it sets the price of the product and the marginal revenue will be less than the prices for monopolies firm hence the downward slopping demand curve. Moreover, in this case, Microsoft altered internet explorer to be favored and to be socially preferred by many users over other browsers in the market. Consequently, when a single big firm’s product become socially preferable than those of its competitors, it is known as natural monopoly (Goodwin et al, 2008). The market structure of a pure monopoly is characterized by one seller in the market, the goods being sold have no substitute and there are barriers of entry into the market by other firms. In the stated case, Microsoft’s products were highly differentiated and this strengthened its market power and economic profits increased due to the imperfect