Why can Microsoft charge such a high patent fee?

If you have your own personal computer, maybe this computer uses an operating system sold by Microsoft, some kind of Windows software. Many years ago, when Microsoft first designed Windows software, it applied for and obtained the copyright granted by the policy. Copyright gives Microsoft the exclusive right to produce and sell Windows operating system. Therefore, if a person wants to buy Windows software, he has no choice but to charge Microsoft nearly 100 dollars for this product. It can be said that Microsoft has a monopoly position in the Windows software market.

The enterprise behavior model we put forward in chapter 14 can't describe Microsoft's business decision correctly. In that chapter, we analyzed the competitive market. In a competitive market, many enterprises offer basically the same products, so each enterprise has no influence on the price it obtains. In contrast, a monopolist like Microsoft has no close competitors, so it can affect the market price of its products. Competitive enterprises are price recipients and monopoly enterprises are price makers.

In this chapter, we examine the meaning of this market force. We will explain that market forces have changed the relationship between enterprise prices and costs. Competitive enterprises take the price of their products as a given, and choose the supply quantity to make the price equal to the marginal cost. In contrast, the price charged by the monopolist is greater than the marginal cost. This result is obviously correct in the case of Microsoft Windows software. The marginal cost of Windows software-the extra cost incurred by Microsoft to copy its programs to another disk-is only a few dollars. The market price of Windows software is many times its marginal cost.