Question

in the 1990s, Microsoft battled Netscape over market share for their web browsers, called internet Explorer and Navigator use this example to analyse whether there are multiple equilibria and, if so, why one equilibrium might emerge in preference to the others.

Answer 1

​​​​Browser war 1990 :-

Synopsis :-

It was a competition for dominance in the usage share of web browsers .

By mid 1995 Net scape Navigator was most widely used web browser and Microsoft had licensed Mosaic to create Internet explorer 1.O which it had released at a part of Windows 95 pack .

1995-1998 Monopolistic competition with Microsoft emerging as the price leader .

Internet Explorer 2.0 was released as a free download . Due to such market entry , his market share increased rapidly . To survive such cut throat competition other companies followed the same .Thus forming a long run monopolistic group equilibrium.

Rising of Microsoft as Monopoly :- After 1998

The Microsoft had three main advantages:-

1) Biggest competition Netscape was a small company thus financially vulnerable .

2) As many purchasers were first purchasers of Computer they have not extensively used the web browsers before . Consequently they kept stuck to internet explorer due to lack of knowledge .

3) Microsoft used a large chunk of revenue for marketing and development .

Eventually Netscape was acquired by America Online and Microsoft left with no serious competition emerged as a Monopoly .