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Antitrust in High-Tech Industries

Review of Industrial Organization volume 38, pages 319–362 (2011)Cite this article

Abstract

Recent economic growth has been led by high-technology industries (See Jorgenson, Ho & Stiroh (2005) for a summary of the research on the recent acceleration of productivity growth). Many firms in these industries have achieved a dominant market position, thereby attracting the attention of competition authorities, often resulting in major monopolization cases. Unfortunately, this attention has not resulted in improved market outcomes. In this paper, we evaluate the effect of Section 2 Sherman Act cases brought against IBM, AT&T, and Microsoft. We conclude that these cases had limited effect on consumer welfare because they did not stimulate entry or innovation. In these industries, competition authorities cannot expect to promote simply an expansion of output and lower commodity prices; rather they should focus their remedies on promoting innovation—new products that replace or compete with the dominant firm’s products.

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Authors and Affiliations

  1. Department of Economic Studies, Brookings Institution, Washington, DC, USA

    Robert W. Crandall

  2. Department of Computer Science, George Washington University, Washington, DC, USA

    Charles L. Jackson

Authors
  1. Robert W. Crandall
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  2. Charles L. Jackson
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Correspondence to Charles L. Jackson.

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Crandall, R.W., Jackson, C.L. Antitrust in High-Tech Industries. Rev Ind Organ 38, 319–362 (2011). https://doi.org/10.1007/s11151-011-9298-4

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  • DOI: https://doi.org/10.1007/s11151-011-9298-4

Keywords

  • Antitrust
  • AT&T
  • IBM
  • Innovation
  • Microsoft
  • Monopolization