Notes
1
For a thorough treatment of competitive strategy in the information economy, see Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, 1999.
2
This section is drawn in part from my paper with Michael Katz, ‘Antitrust in Software Markets’.
3
This is true whether the firms engage in pricing competition or quantity competition. See Davidson and Deneckere (1985) and Farrell and Shapiro (1990), respectively.
4
See Shapiro (1996b) for an accessible treatment of gross margins and diversion ratios in merger analysis. See Werden and Froeb (1994) for a more extensive analysis using the ‘logit’ model of demand.
5
The DOJ and FTC revised the 1992 Guidelines in 1997 to articulate more fully how efficiencies would be handled in the merger review process. Although the stated intention of the agencies was to be more receptive to efficiency claims, it remains to be seen how this will work in practice.
6
I have been involved in many of these merger reviews. In particular, I worked for the FTC in the Adobe/Aldus merger, for the DOJ in the Microsoft/Intuit and Computer Associates/Legent deals, for the merging parties in the Borland acquisition of Ashton-Tate, and for DIRECTV in the Primestar matter. In the vertical mergers discussed below, I was retained by the acquiring firm in the Silicon Graphics/Alias/ Wavefront, the Time Warner/Turner, and the Cadence/CCT deals. The statements in this chapter are not intended to represent the views of either the government agencies or the companies involved.
7
The experience of Computer Associate’s ‘Simply Money’ program in this market is instructive regarding entry barriers in software. Even though Computer Associates virtually gave its program away, and received some favorable reviews, it still could not gain wide acceptance.
8
FTC press release, 31 March 1997, at www.ftc.gov/opa/9703/autodesk.htm.
9
Decision and Order in the Matter of Silicon Graphics, Inc., Docket No. C-3626, November 1995. The FTC also required that SGI offer independent entertainment graphics software companies participation in its software development programs on terms no less favorable than those offered to other types of software companies.
10
See Chapter 8 of Information Rules for a more complete discussion of compatibility and cooperation.
11
See my recent paper with Michael Katz for a more extensive discussion of standard setting and antitrust. The highly successful CD standard has been challenged in a private action, Disctronics Texas, Inc., et al. v. Pioneer Electronic Corp. et al. Eastern District of Texas, Case No. 4:95 CV 229.
12
I testified for Atari Corporation against Nintendo in their antitrust trial. Nintendo was not found to have violated the antitrust laws.

References
Anton, J. and Yao, D. (1995) ‘Standard-setting consortia, antitrust, and high-technology industries’, Antitrust Law Journal 64, 247-265.
Arthur, W. B. (1989) ‘Competing technologies, increasing returns, and lock-in by historical events’, The Economic Journal 99, 116-131.
Balto, D. (1997) Networks and Exclusivity: Antitrust Analysis to Promote Network Competition , Federal Trade Commission, April.

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