Carl Menger pointed out that producers of unique goods and services do not have arbitrary and unlimied “monopoly power.” Their actions are instead constrained by rivals and by consumers’ subjective preferences. The monopolist has only limited discretion which, if abused, can be frittered away.
An example is the worldwide frenzy for the 1.0 release of Firefox, the increasingly viable competitor of Microsoft’s Internet Explorer. IE’s market share, about 95% during the last several years, has been falling steadily since the beta version of Firefox was released. Apparently IE’s market dominance was due not to illegal tying or nefarious “network effects,” but to consumer preference, a preference that may be changing.
So much for Microsoft’s much vaunted monopoly power!