Indeed, Enron's problems had been apparent for some time before November 28,yet credit agency review of Enron on that date did not produce a change in the company's investment grade credit rating. If credit agency ratings are intended to be vehicles for enhancing transparency and protecting consumer interest, what does it mean that the agencies failed to signal these socially costly collapses? Nonetheless, the fact that the agencies gave the appearance of failing at their gatekeeper function in these instances is intuitively unsettling.
The IBM  case in the s and the Microsoft case  have polarized debate over the role and enforcement of competition law. Some argue that the computer industry and related sectors require a new type of antitrust, by which they mean a more permissive regime. Others believe that the concerns raised by the computer sector are no different to those routinely dealt with by competition authorities, say in the telephone, media and pharmaceuticals sectors - so there is no need for a new competition law and new economics - just better analysis and more stringent enforcement to prevent irreversible monopoly positions being created.
There is no doubt that the computer industry poses a challenge to competition law and its economics. The industry raises traditional competition law concerns of monopoly, foreclosure and bundling together with more complex considerations of innovation, tipping, and the interplay between intellectual property rights and competition law.
It raises the question whether the static definition of market power — usually cast in terms of the ability to profitably raise price above the competitive level — is an adequate benchmark in emerging industries where non-price competition, dynamic efficiency, price discrimination and prices below marginal costs are endemic.
This article addresses some of the economic issues raised by the computer sector relevant to competition law analysis.
The discussion is organized as follows. Section II identifies several basic economic concepts relevant to the competitive assessment of the computer industry, its structure and business practices. This is followed in Section III with a critical assessment of the implications of these concepts for policy and competition law enforcement, and the concerns over how dynamic competition factors should be incorporated into competition law Section IV.
The discussion then turns to the definition of relevant markets and in particular whether complementary products should be regarded as one or two relevant product markets Section Voften referred to as aftermarkets.
The discussion then looks at the economics of product bundling Section VI and a brief discussion of intellectual property rights Section VII.
The discussion for the most part makes reference to European law and cases, and in relation to bundling United States v Microsoft Corporation.
The discussion below focuses on the demand side concepts which have excited most interest. The supply-side considerations while not discussed are nonetheless important, and where significant will tend to reinforce the considerations addressed below.
A Basic Concepts The first concept is network effect or externality. This is where the utility that a user derives from consumption of good increases with the number of other users consuming the same good. The more people with telephones, the more useful and the more valuable are telephones to the user.
Direct network effects are relevant for two-way telecommunications systems such as fixed and mobile networks, the Internet, Instant Messaging and other communications networks. An example of an indirect network effect is a computer operating system OS.
If only five people use the same operating system, few would write any programmes and applications for that system, which would limit its usefulness.
But as more people purchase that same operating system, programmers will create more programs for that system, increasing its usefulness. This will attract more users and begin to generate positive feedback effects that increasingly make the OS more attractive to both programmers and users.
A public good exists where the consumption by one individual does not detract from the consumption of others. It thus differs from an apple — a private good - which once grown and eaten, is unavailable to the rest of the world.
Television programmes, computer software, music and most other media and information products have public good characteristics. While the notion of a public good is a demand-side concept arising from the indivisibility of consumption, it has a supply-side counterpart.
Public goods imply that the marginal costs of supplying the good or service to more users are low or negligible. An episode of Fiends has a large sunk cost of production which does not vary with the number of times it is broadcast or the size of its audience.
This, in turn, gives rise to the existence of large sunk costs and products where marginal costs are below average total costs. B Welfare Economics Considerations The proposition that markets in the computer sector are characterised by significant network effects and public good features has significant implications for competitive analysis even in a static setting.
In particular, the usual optimality conditions that prices equal marginal costs no longer holds, and this in turn means that many of the usual tests for misuse of market power will need to be modified. First, network effects explain why and how network operators and producers seek to actively network growth.
The existence of significant network effects will encourage network operators to increase the number of users and expand the network. This is because an external benefit positive externality or cost negative externality does not influence the actions of those who make resource allocation decisions.
A network effect as defined above, on the other hand, is often taken into account by network operators who gain by internalising it, either by growing or interconnecting physical networks, or adopting pricing and marketing strategies which seek to rapidly grow the number of users and the products diffusion in the marketplace.
Therefore it is wrong to characterise these network effects as externalities, and hence to imply market failure. This is why the neutral term network effects has now been adopted in much of the literature.
However, since larger networks generate greater consumer benefits than smaller networks, this outcome is economically efficient, provided the larger network does not misuse any market power. In addition the costs of developing the second smaller network are avoided.
Thus, there is no necessary reason to assume that network effects, even in the absence of anti-competitive actions, will necessarily lead to a natural monopoly situation, or market tipping see below. Network effects create an incentive for co-operative solutions by holding out benefits from interconnection of separate networks.
When separate networks are interconnected then the sector as a whole and consumers and operators benefit from network effects — all have the gains associated with a larger network.While determining such a policy investment opportunities of the firm, its present economic status and investors preference should be given due weightage.
Generally a wide-ranging dividend policy comprises the following elements: 1. It is my understanding that in November of , investors filed a securities fraud complaint charging that MCI WorldCom, Messrs. Ebbers, Sullivan and other insiders had concealed material, false information about its receivable and earnings performance while personally unloading almost $80 million of stock at inflated prices.
Speaker Biographies: Bretton Alexander President, Personal Spaceflight Federation Executive Director, Space Prizes and X Prize Cup, X Prize Foundation Since December , Bretton Alexander has been president of the Personal Spaceflight Federation, the industry association of businesses and organizations working to make commercial human spaceflight a reality.
Paul Chapman’s Ex Cathedra of 14 February pointed out some flaws in the precipitate decision to pull the plug on the inquiry into structural separation of Telstra. In my opinion, the flaws run much deeper than Paul set out.
(MFS – part of MCI Worldcom - in north America and Europe, and COLT in Europe) already operate a policy of. The Applicants further contend that the proposed merger will provide VoiceStream with the resources necessary to accelerate the build-out of VoiceStream’s existing licenses and to acquire additional spectrum to fill out its near nationwide footprint.
Fiorina was born on September 6, , in Austin, Texas, the daughter of Madelon Montross (née Juergens) and Joseph Tyree Sneed III.  The name "Carleton", from which "Carly" is derived, has been used in every generation of the Sneed family since the Civil War.
 At the time of her birth, Fiorina's father was a professor at the University of Texas School of Law.