Re: Merge Intel & Microsoft

Wei Dai (
Mon, 4 Oct 1999 01:31:11 -0700

On Sat, Oct 02, 1999 at 06:34:54PM -0400, Robin Hanson wrote:
> In the model I described, there are no costs, only benefits.So the question is:
> 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?

> Perhaps. But it would be hard to monitor such an agreement. Thesame pressures
> that lead to the break up of cartels work here. Intel
> could offer Dell hidden price discounts, for example, that they don't
> tell Microsoft about. Or they could claim to give discounts they don't.
> Microsoft could do the same.

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.

> Microsoft employees are incentivized by Microsoft stock and options,not by
> Intel stock or options. I find it pretty implausible they are
> trying to maximize anything but Microsoft stock.

Perhaps Microsoft should issue stock options to Intel employees (at least to the ones who have authority to set prices) and vice versa?