Microeconomics for MBAs 41. The Economic Way of Thinking for Managers. Microeconomics for MBAs develops the economic way of thinking through problems that MBA students will find relevant to their career goals. Maths is kept simple and the theory is illustrated with real-life scenarios | Chapter 12 Monopoly Power and Pricing Decisions the browser market and a potential competitive threat in the operating system market. The Justice Department also argued that the market dominance Microsoft now enjoys in the operating system market could be equated with monopoly power because of the presumed existence of high switching costs and lock-ins. Switching Costs and Lock-Ins Once people have adopted the operating system along with the accompanying computer hardware and have learned how to use the accompanying applications there are presumed costs of switching to other operating systems. To switch people have to buy a different operating system and maybe different computer equipment as well as learn new applications that might require different instructions and have a different look and feel. They might also have to retool and retrain their computer service providers or switch providers altogether. Assistant Attorney General Joel Klein introduced switching costs into his argument by first repeating his position that Microsoft was convinced that it could not win the browser war based on the relative merits of Internet Explorer. He then quoted Microsoft s Megan Bliss and Rob Bennett who wrote in an email that the way to increase Internet Explorer s share of the browser market was by leveraging our strong share of the desktop I f they get our technology by default on every desk then they ll be less inclined to purchase a competitive solution. . . . 8 The Justice Department s chief economist Franklin Fisher gave more details in his testimony for the government Where network effects are present a firm that gains a large share of the market whether through innovation marketing skill historical accident or any other means may thereby gain monopoly power. This is because it will prove increasingly difficult for other firms to persuade customers to buy their products in the presence of a product that is widely used. The firm with a large market share may then be able
