Re: Merge Intel & Microsoft

Peter C. McCluskey (
Mon, 11 Oct 1999 08:57:02 -0700 (Robin Hanson) writes:
>Peter McCluskey wrote:
>>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.
>Ok, that's a reasonable point. I guess it comes down to how serious these
>are as entry threats? If they don't have much of a chance of beating Intel
>or Microsoft, then it's a shame to impose great inefficiency on current
>customers merely to increase a small chance of a competitor beating them.

I'm fairly confident that an independant Intel would be beaten if it priced chips as if it had a full monopoly, and I suspect this competitive pressure has an effect on prices that is comparable to the benefits of a merger.
With Microsoft, I'm not convinced a model that looks only at prices captures the biggest efficiency differences. The amount of competition probably has a significant effect on OS quality by altering the behavior of Microsoft employees in ways that accountants can't measure. The quality differences between OSs are more important to me than the price differences.

>These are tradeoffs between the advantage of raises prices
>on the consumers you have (the first term) and the advantage
>of lowering prices to get more consumers (the second term).
>The first max puts twice as much weight on the first term. QED?

Ok. If I thought they were acting as if there was negligible competition, I would agree with your conclusions.

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