[rgreen4]

Did you sleep though the Economics course? That is exactly what a free market economy does and history is replete with examples. Theoretically, Beta was technically superior to VHS, yet VHS won out in the market place. In the early days of Micro Computers, some claimed that Apple was superior the the IBM PC, yet the IBM PC beat out the Apple in a free market situation. It's the reason we drive on the right and not the left side of the road (first cars in the U.S. predominately had the drivers position on the right side). Gasoline powered cars beat out both steam and electric (although the latter battle may be in the process of being re-joined).

As each consumer weighs their choice of products, the experience and even which brand the neighbor owns plays a major part in the decision. If you exchange documents with a colleague would you chose a file format that his machine has trouble opening? Of course not, you might just as well send it in a foreign language they can't read. In either case, the document does them no good. So instead you choose a package that generates a document fully compatible with their package.

There's another word for this process - Freedom of Choice. Each customer is free to chose how, when and on what product to spend their money,

[AySz88]

Uh..... yes? My point was that a market, left alone, does not always get "the right answer" (the best optimum), and people see this and it is causing frustration.
Maybe I should elaborate a bit. Notice that, in your examples, the market ends up getting rid of all competition, stagnating and "locking in". Since the market is all about competition, this is a very bad thing - it goes against all the principles of capitalism. Done carefully enough, the market can be structured to avoid this: we need coax the market into a better situation without this externality of document formats. For example, creating ODF and keeping it the only "open" standard would have created a freshened market without the possibility of a proprietary document format getting in the way (as I mentioned before). This can be enough to get people to move to this better optimum - one where competition doesn't stagnate due to the externality caused by proprietary formats.
This obviously must be done very carefully - you're correct that cherry-picking ODF removes a market, specifically a marketplace of document formats, but that market is unfortunately already stagnant, and becoming more and more broken. To clarify just how broken it is, consider that OOXML was never chosen by the marketplace, but it's threatening to take over .doc just by the pushing of Microsoft. Getting us "over the hump" into some better economics is more important than keeping around an intrinsically broken market.
Consumers are still free to choose whatever format they'd like; the government can choose whatever they want too. And they chose "only formats which are 'open'", I think with the very clear intention of doing what I just described. Theoretically, restricting to "open" formats should create a new marketplace of open formats, since now the format (competing on compression ratios and implementation ease and such) and the actual program (usability and such) are theoretically disconnected and unrelated (given enough ease of implementation). But the externality effect still exists, and OOXML has too much baggage - it has already had a wide "adoption" while being closed, and doesn't need to compete to 'win' in the market that was supposed to be fresh.




edit, about 'choice'

[bobincanada]

This is a rather silly article with an even sillier headline.
No office suite in the world can natively reproduce the MS Office 2007 file formats other than MS Office 2007.
That's no accident. It's deliberate. No matter how many times Microsoft repeats the word "interoperability", it doesn't make them interoperable. Microsoft is the biggest obstacle to software interoperability in the world today. They don't want interoperability because it will break their monopoly.
Microsoft was on the OASIS committee that created the vendor neutral "Open Document Format" that was approved by the ISO in July, 2006. They could have implemented the ODF in MS Office 2007 or else a subsequent office suite. They chose not to. Why? Because it would create a genuine free market in office suites. People would be free to choose what they wanted to use based on features and price.
Instead Microsoft bullied ISO into adopting OOXML which isn't even properly implemented in Office 2007.

[AySz88]

An update: To make this article look even more silly, it looks like Microsoft also acknowledges that OOXML in Office 2007 isn't very close to the ISO-compliant sort of OOXML, only "substantially supported" (no duh, as it's their own format). From this PC World blog article: www.pcworld.com/businesscenter/blogs/mcallister[uon[/u]software/146162/odfwinstheofficedocumentformatwar.html]
> Even more surprising, however, was the corollary to the announcement. While the Office programmer bees are busy buzzing away at ODF, OOXML (Office Open XML) is being put on the back burner. Don't expect Office to support a fully ISO-compliant version of OOXML until the next major release of the suite, currently codenamed Office 14, release date unknown.The original story appears to be here: [http://www.consortiuminfo.org/standardsblog/article.php?story=20080521092930864]
[/quote]


Here's Microsoft's spin from their press release:


> In addition, Microsoft has defined a road map for its implementation of the newly ratified International Standard ISO/IEC 29500 (Office Open XML). IS29500, which was approved by the International Organization for Standardization (ISO) and International Electrotechnical Commission (IEC) in March, is already substantially supported in Office 2007, and the company plans to update that support in the next major version release of the Microsoft Office system, code-named “Office 14.”