Wei Dai wrote:
> > what important things that model might be missing?
>
>What about the possibility that Microsoft and/or Intel do currently face
>significant competition or could face significant competition in the
>future if they don't merge?
What might make a difference would be if merging substantially reduced the ability of competitors to contest either the chip or OS market. This doesn't sound very plausible to me on first glance, however.
>The advantage of these agreements compared to cartels is that they would
>be legally enforceable. I don't see why they would be harder to enforce
>than any other legal contract where monitoring would be required. Patent
>licenses for example. If Intel and Microsoft don't currently have these
>kinds of agreements in place, I think we should encourage them to make
>these agreements rather than to merge.
I guess you'd need to talk to an expert in anti-trust law to see if such they have reasons to fear being prosecuted for such a contract. And yes, if monitoring is cheap enough, then such a contract is a reasonable substitute for merging.
Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323