Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Friday, September 23, 2011

Leveraging Monopoly Power by Degrading Interoperability: Theory and evidence from computer markets

Posted by D. Daniel Sokol

Christos D. Genakos (Cambridge), Kai-Uwe Kuhn (Michigan) and John Van Reenen (LSE) have an interesting paper on Leveraging Monopoly Power by Degrading Interoperability: Theory and evidence from computer markets.

ABSTRACT: When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by 'restoring' second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft’s strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/09/leveraging-monopoly-power-by-degrading-interoperability-theory-and-evidence-from-computer-markets-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef015434ad33ac970c

Listed below are links to weblogs that reference Leveraging Monopoly Power by Degrading Interoperability: Theory and evidence from computer markets :

Comments

Post a comment