Structure-Conduct-Performance Analysis of the Web Browser Market - Essay Example

The feedback critique model of SCP suggests that the structure of an industry affects the conduct which then affects the performance of the companies. At the same time, there are relations in the reverse direction as well with conduct affecting the structure and performance affecting the structure.

The structure of the industry is dependent upon other exogenous factors such as demand and technology (Carlton and Perlof, 2005).
Structure of the Web Browser Industry
As can be seen from the market concentration of the web browser industry it is majorly covered by two players with Microsoft and Mozilla Firefox covering 84.7% market share. The entry and exit barriers are relatively higher and the product is mostly homogenous across all companies without much differentiation. This suggests an oligopolistic nature of the web browser industry.

The companies are dependent upon others and shall take other companies' actions and counter-moves of other companies while making decisions (Melvin and Boyes, 2002).
Conduct of the Web Browser Industry
The oligopolistic nature of the web browser industry implies that there is a chance that companies might indulge in collusion to stabilize the market position. In such a situation, the role of Competition Commissions becomes important to stop the formulation of cartels as it may hinder the growth of the market.

In the case of the web browser industry, Microsoft is bundling the web browser with its operating system, thereby giving fewer chances for other players to launch their web browser and earn profits. As a result of the skewed market share of the web browser industry, the smaller players in the market have to try hard to gain market share and find innovative ways of doing the same.

The reason behind the decisions made by Competition Commissions
The competition commissions in its decision said that it is necessary for Microsoft to show the browser choice screen. The reason stems from the fact that when the windows are shipped, it is boxed with the internet explorer which roled to many users not making use of another web browser. In order to provide a level playing ground for all the web browser providers, it is necessary that no browser gets an undue advantage which was the case when Microsoft OS was shipped with Internet Explorer.

References Carlton, D.W., and Perlof, J.M. (2005). Modern Industrial Organization, 4th edition. Pearson/Addison Wesley. Melvin, M & Boyes, W. (2002). Microeconomics, 5th ed. Houghton Mifflin.