Volume 27 (2004)

Volume 27 (2004) / Issue 4

Net Le, 'Microsoft Europe and Switching Costs' (2004) 27 World Competition, Issue 4, pp. 567–594


Developing the studies of economic authors on switching costs, I hypothesise that a dominant software incumbent abuses his market power if he prejudices consumers without justification. Consumers will suffer detriment when their switching costs (S) are higher than the maximum utility surplus brought to consumers by an entrant’s product (Max ?U), or when the incumbent intentionally raises switching costs without justification. To remedy this, the incumbent should grant the entrant a licence to access any interfaces or data formats which could reduce S. A refusal to grant a licence may result in an abuse, unless it is otherwise justified on the grounds of sunk costs and free riding.

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ISSN: 1011-4548
ID: WOCO2004030