The Negative Consequences Of The Sherman Act

2016 Words9 Pages
The Sherman Act and how monopolies get a bad rap I don’t think it is any secret that the word “monopoly” carries a negative connotation in our society. I have to admit that up until a few weeks ago I would have said that monopolies are always an inherently bad thing for consumers. Obviously that isn’t the case, but there does appear to be a great deal of agreement that when monopolies take actions which have anti-competitive consequences this is harmful to consumers in the long-run, hence the Sherman Act of 1890. Stranger to me though is how up until a few hours ago I would’ve said that the Sherman Act was definitely a good thing. It makes sense that the government should take actions to stop monopolies from doing the things the Sherman Act makes illegal. Then I read an article by Milton Friedman published during the time of the trial titled “The Business Community's Suicidal Impulse” (which I’m betting you’ve read). He makes a good argument for how enforcing antitrust laws tends to lead the way to regulation of an industry which may hurt competition and cause more harm than good in the long run.…show more content…
One of the main ways monopolies abuse market power is by using their market share to price higher than what they would in a competitive industry. To me, this is the part where the case seems to break down. Microsoft had over 90% of the market share in the Intel-compatible PC market. With that type of pull, Microsoft’s economist estimated that Microsoft OS should’ve been selling for a monopoly price of $1,800. At the time though, Windows was selling their OS to OEM’s for quantity discounts that ended up at $40-60 dollars on average per OS sold. Even if Window’s economist completely exaggerated the monopoly price of $1,800, it would still seem that, if anything, Microsoft was using predatory

More about The Negative Consequences Of The Sherman Act

Open Document