Question: In 1989, Microsoft introduced its Excel spreadsheet software. By the end of the 1990s, Excel had driven out Lotus 1-2-3 and Quattro, and dominated the

In 1989, Microsoft introduced its Excel spreadsheet software. By the end of the 1990s, Excel had driven out Lotus 1-2-3 and Quattro, and dominated the market. Presently, its only competitor is Calc, a spreadsheet program produced by OpenOffice. OpenOffice emphasizes that Calc “looks and feels familiar and is instantly usable by anyone who has used a competitive product.” (Source: OpenOffice.org.)

(a) Explain the network effects in the demand for spreadsheet software.

(b) Use the concept of critical mass and tipping to explain the demise of Lotus 1-2-3.

(d) Should Microsoft cooperate with OpenOffice in the further development of Calc?

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