Thursday, 17 December 2009

No 41: Decline of Internet Explorer

IN AS classes we have been talking about Microsoft and monopoly power. Here is a chart showing changes in the browser market:



This raises a number of questions:
1) What are the key changes shown in the diagram?
2) Which problems could arise from one company having such a large market share?
3) What are some economic explanations for the decline in IE's market share?
4) Can problems with monopoly power be best solved by using government intervention or by relying on the free market?

All of these are possible exam questions, so if you are doing one soon, you may want to consider your answers and perhaps leave a comment below.
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3 comments:

  1. The17 December 2009 at 14:01

    For question 3 I think there is a reduction in IE's market share
    because EU has taken action to prevent Microsoft from abusing its
    monopoly powers to freeze out rivals . We can see that after the
    argument between Microsoft and EU , Microsoft has a fine of $1.4bn and
    they wanted to end their row by releasing windows 7 which allowed other
    browsers beside IE to have chances to gain market shares and therefore
    we can see a reuction in the use of IE and an upward trend for others
    browser likes Firefox , etc.

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  2. Unknown18 December 2009 at 08:35

    question 2)
    if a firm have a marker share more than 25%, this mean they can enjoy marker power a set their prices higher for their customers. they are price makers and quntity of output theur offer affect prices. there are high barriers to entry AS well. and they can enjoy supernormal profit in the long run
    in case of microsoft they left no choice for customers.
    most computers incluse Internet Explorer already so we cannot choose the browser. t. after purchase people don't usually change their browser which give even more market power for Microsoft.

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  3. JH19 December 2009 at 01:13

    i dont know much abt microsoft in very detail but i believe that they do quite a lot of R&D and contribute to the internet improvements which small internet firms might not be able to afford and this might provide more positive externalities such as better quality for the internet users etc..however if Microsoft is not as efficient(like many other firms with monopolistic power) and use their POWER in "not-the-best way" and if total ngtv extn>total pstv extn, then it might be essential for the govt to intervene.
    Qusetion: what country's govt are we concerned about? cuz i think govts in other countries would have different causes

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