Re: Merge Intel & Microsoft

Peter C. McCluskey (
Thu, 14 Oct 1999 19:19:30 -0700 (Robin Hanson) writes:
>Peter McCluskey wrote:
>>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
>The question is how much this threat would be reduced by a merger. Merged
>threats, such as Apple offered bundling its OS with Motorola chips,
>would still be feasible.

I doubt that anything has a chance if it avoids Intel compatability and Microsoft compatability at the same time. I'd guess that there's currently a 40% chance that Linux or something similar will beat Microsoft. My estimate would drop below 10% if Intel and Microsoft merged with no regulatory strings attached.

>Actually, the same analysis applies if there is *any* market power.
>In this case, D(P) represents the effective demand each firm faces
>taking the other firms into account. Unless there is an exact price
>threshold, such that sales are zero above that threshold and 100%
>of the market below that threshold, a firm has some market power.

Ok, you've convinced me that they should set prices as if they were a single firm. My objections are to letting them develop standards as a single firm. It looks like we would probably both be satisfied if they were encouraged to collude on pricing, but not allowed to merge.

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