Merge Intel & Microsoft

Robin Hanson (
Thu, 30 Sep 1999 14:38:18 -0400

A nice test to apply to economists is whether they have the courage to endorse politically unpopular positions that economic theory seems to support.

Here is a nice example of such a test: do they support merging Intel and Microsoft?

Intel and Microsoft both seem to have strong nearmonopoly market power, and their products are clearly strong complements. So the standard industrial organization analysis would suggest that merging them would produce lower prices *and* more profits for the merged firm. Perhaps weak competitors to them would lose, such as Apple or TI, but one expects huge welfare gains for all from cheaper computers.

Of course this seems political difficult to see, mainly because many people work off a simple "all concentrations of power are bad" heuristics. A good test of an economist is whether they are willing to let economic theory override such heuristics in specific cases.

Robin Hanson Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323