Since many people use the Microsoft Windows operating system, software developers have an incentive to write new programs for Windows, computer manufacturers make new models of their computers that use Windows, and firms that make printers will be certain their printers work well on Windows computers.
a. Show that Microsoft Windows is an example of a network externality.
b. Suppose there are 10 people who use personal computers and that the value to each of them from using Windows is as follows:
Number of People Using aValue to Each Person Who Uses a
Windows ComputerWindows Computer
1 ………………………………………………….110
2………………………………………………….120
3………………………………………………….130
4………………………………………………….140
5………………………………………………….150
6………………………………………………….160
7………………………………………………….170
8………………………………………………….180
9………………………………………………….190
10………………………………………………….200
Suppose for the moment all 10 people are using Windows and so Microsoft is a monopolist in the market for computer operating system. Why would it be difficult for a company to offer a new alternative to Windows? Explain.