Economics

The article that I chose was written by Steven Levy, a Newsweek Senior editor, called Mulling the Merger: Microsoft, Yahoo! And Google” Who do you antitrust? I felt that this article highlighted the roles of market structure for monopolies and that is why I chose this article. I felt that the article did a good job of pointing out the facts, while giving limited statistical information. In a way the article could also be considered an opinion piece on how Steven feels about the situation that Microsoft, Yahoo, and Google are in.

A monopoly is a firm that is the only seller of goods or services that do not have a close substitute. As we have talked about it throughout the semester we have yet to find anywhere where a monopoly exists. As we have discussed in class, one way that a monopoly is found is by measures of concentration. The main measure used is the Herfindahl-Hirschman Index. As Steven stated in his article, “if Microsoft combined its Internet assets with Yahoo’s, the combined companies would have an 85 percent share of portal front pages, an 80 percent share of Web mail, almost a 90 percent share of Web-based instant messaging, and by far the largest sites in business, music, sports and many other areas.” (Levi, 1) The Department of Justice and the FTC will more than likely challenge this because the post-merger HHI would be above 1,800.

I think that this could pose major problems for the smaller firms within this market, although I imagine there aren’t very many firms in this market. If Microsoft were to merge with Yahoo it would give them a clear advantage over their competitors. With the vast technological knowledge had within these two companies Microsoft would have a large shift to the right on the demand curve, whereas Google would probably have a shift to the left on the demand curve. Microsoft could also have a large shift to the right on its supply curve, while again Google would probably have a shift to the left on their supply curve.

Levy, Steven. "Mulling the Merger: Microsoft, Yahoo! and Google: Who do you antitrust?" Mulling the Merger 13 FEB 2009 Web. 20 Apr 2009. .