work? A commonly proposed rule is that if a firm is selling for less than its average variable cost—that is, at a

price where it should be shutting down—then there is evidence for predatory pricing. However, calculating in

the real world what costs are variable and what costs are fixed is often not obvious, either.

The Microsoft antitrust case embodies many of these gray areas in restrictive practices, as the next Clear It Up

shows.

CLEAR IT UP

Did Microsoft® engage in anticompetitive and restrictive practices?
The most famous restrictive practices case of recent years was a series of lawsuits by the U.S. government against

Microsoft—lawsuits that some of Microsoft’s competitors encouraged. All sides admitted that Microsoft’s Windows

program had a near-monopoly position in the market for the software used in general computer operating systems.

All sides agreed that the software had many satisfied customers and that the computer software capabilities were
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