Re: Merge Intel & Microsoft

Peter C. McCluskey (
Wed, 6 Oct 1999 09:29:12 -0700 (Robin Hanson) writes:
>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.

I find it easy to imagine that the merged company would be much less likely to cooperate with AMD about problems AMD has with running Microsoft software, and with Linux/FreeBSD developers about problems they have adapting their software to new chips.

I also wonder how the merged company's influence on legislation would differ from the current situation.

>are sold by separate monopolists, then P = PX + PY and each
>monopolist does something like
> max (PX - CX) * D(PX + PY)
> PX
>Where CX is the cost of making X. If the two firms are
>merged, then together they
> max (P - CX - CY) * D(P)
> P
>This leads to both a lower price P, and more profits. QED.

I don't see how this conclusion follows from the analysis you presented.

Peter McCluskey          | Critmail ( | Accept nothing less to archive your mailing list