>The Wall Street Journal frequently denounces "junk science." By that they >seem to meen expert testimony that supports seeking damages from some >business. > > Richard Schmalensee, an MIT economist is testifying for Microsoft >in the antitrust trial. The NY Times quoted him Thursday re whether or not >Microsoft has a monopoly in operating systems. He says they don't. The >Times said that in his written testimony Schmanesee says "A firm with >monopoly power over the operating system would charge at least 16 times >over what Microsoft charges." The Times went on to say that the price of >Windows would then be $800. > > To me, that is junk science. Only somebody who internalized in >first year economics that firms charge marginal costs, and that monopolists >set prices where MC = MR could write such nonsense. As Hal Varian puts it, to Schmalensee Microsoft is not a monopoly because Microsoft faces extraordinarily fierce competition from its own installed base... But it wouldn't do Schmalensee's clients much good for him to spell out that the major thing preventing Microsoft from being a monopoly now is all those earlier versions of Windows floating around out there... Brad DeLong
