A half-century ago, Joseph Schumpeter (1950 Chapters 5–8) presented a vision of modern capitalism in which monopolies are common but frequently swept aside by a “perennial gale of creative destruction” (p. 84). This gale is driven not by price competition, but by “competition from the new commodity, the new technology ... competition which strikes not at the margins of the profits of the existing firms but at their foundations and their very lives” (p. 84). I focus here on the personal-computer (PC) software (hereafter simply “software”) industry, which resembles this vision. I discuss some important issues this industry poses for antitrust policy and, in the final section, illustrate with examples from the Microsoft case.
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