Re: Merge Intel & Microsoft

Wei Dai (
Fri, 1 Oct 1999 18:15:00 -0700

On Thu, Sep 30, 1999 at 02:38:18PM -0400, Robin Hanson wrote:
> 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?

Are there any economists that do support this position? It's not completely obvious to me that the (social) benefit of the merge exceeds the cost.

Microsoft and Intel may already have captured some of the potential benefits of merging through reciprical agreements to lower prices. Such agreements may be explicit contracts or implicit in their pricing strategies (e.g. analogies to tit-for-tat in the iterated prisoner's dilemma game).

Also, assuming that most Microsoft shareholders also hold Intel stock, shouldn't Microsoft already be maximizing some joint function of Microsoft's profit and Intel's profit instead of maximizing Microsoft's profit alone? It's the same reasoning that says a monopoly should set its prices lower than the profit-maximizing level if its shareholders also buy its products and price discrimination isn't possible.