The four basic market structures we have studied are perfect competition, monopoly, oligopoly and monopolistic competition properties are summarized in the table. The basic market structure that is under discussion in the current scenario is monopoly in a situation where Microsoft is allegedly breaking the anti-monopoly laws i.e. moving from a perfect competition situation to a monopoly where it has complete control over the internet software industry. As could be seen from the table there is no entry barriers in Perfect competition while there are entry barriers in monopoly. Microsoft was alleged of creating barriers in the industry by adding Internet Explorer to the Windows software pack. But looking at it in a different light it is just creating more competition and variety in the market. As everyone has perfect knowledge the competitors can also bundle their internet software with other operating systems. Thus if innovation decreases competition Microsoft was for sure doing it.
Consumer Behavior
Consumer behavior is the study of how consumers behave while buying. In the current scenario the consumer had full opportunity to download the competitor companys software from the internet. Internet Explorer did not stop those downloads. Consumer behavior depends on the service that is being provided to them. If consumer believed that the service that was being provided was not up to the mark they can switch as the competitor software was free to download on the internet.
Production Costs
Production cost theory states that the price of a certain product depends on the resources that were used to make it. In Microsofts case they were charged of giving the Internet Explorer free with Windows while money went in its development as explained by the definition of production costs therefore not selling Internet Explorer at the price it is being produced and decreasing competition in the market. But, in this situation all the competitive companies such as opera had there software online for free this was also equivalent to what Microsoft was doing. Hence, Microsoft could not alone be blamed for this.
International Trade
International Trade is the exchange of goods and services in between countries. It is similar to trade that takes inside the country only difference is that it is sometimes costly and time consuming. In the current scenario of Microsoft it did not violate any international trade laws by providing Internet explorer with windows because internet had narrowed the trade barriers to such a situation that most of the software was readily downloadable from the internet and as discussed before everyone has equal opportunity to download anything. Thus, Microsoft can not be blamed of exporting software that decreased the competitiveness of the overall world market.