Antitrust Legal Issues 2

    Market power is considered harmless so long as it is kept in check by the concept of entry. Theoretically, even an absolute monopoly must remain competitive as long as the possibility exists that a new firm might enter the market to offer new competition. If the possibility does not exist, possibly as a result of the anticompetitive practices a monopolist employs to maintain his monopoly, the monopolist is free to do as he pleases in terms of output and prices.

    The possibility of entry is assessed by examining "barriers to entry," conditions which exist that would tend to discourage entrepreneurs that would otherwise enter a market and offer the monopolist competition.

    The government says that barriers to entry are rampant in the current software industry, and cites Microsoft's misconduct as the source of many of them. According to the DOJ, everyone who becomes a significant competitor to Microsoft is in effect defeated by Microsoft's unfair business practices. This is alleged to have harmed the consumers, who suffer substandard innovation and higher prices for software.

    Microsoft says that entry is always possible in a free capital market, one in which mergers are not impeded. A joint venture by several weak firms can easily erode the market share of an abusive monopolist. This fact makes entry a necessity, market power a moot point, and any monopoly inherently short lived. Opponents of antitrust legislation cite the same argument when claiming that the only permanent monopoly is one endorsed and defended by the government, such as a public utility.

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