From: Ross A. Finlayson (raf@tiki-lounge.com)
Date: Thu Sep 30 1999 - 14:00:31 MDT
Here's another question in a similar vein, how would it ever be possible
to unmerge Microsoft and Intel? It would likely not be.
Economists vary, but many might posit that Intel and Microsoft comprise
a duopoly. An issue with this is that there are still enough
competitors, and more or less always will be, that Wintel can not
exercise a monopoly's price fixing in the face of stringent
competition. So, they more illustrate economies of scale and good long
term management than pure technical superiority, which engineers might
see differently than Microsoft.
That, that being the fact that a technical monopoly does not exist, or
if it does it is not leveraged to its full classical economic extent,
still does not change the fact that the Windows operating system is the
de facto platform run as a person's computer by a large majority of the
population. Thus, it is kind of like the phone system, which happens to
be regulated. By the same token, there should not be barriers to entry
in any shape or form, but it's not like there isn't already.
Considering Microsoft business tactics which are to steadily erode
competitors' foothold on the prevalent Win32 platform and in general
obvious and near insurmountable technical predisposition towards their
own products yield them with, for example, the Office suite, besides the
operating system. Then, there is Internet Explorer, which has been
spot-welded onto Win32 quite ably.
So, Microsoft software on an Intel platform is in many ways the status
quo. The problem is that they are a for-profit company (which is not in
itself a problem) that does not necessarily yield to its customers
(everybody's) best interests.
Back to the question asked, I think that merging Intel and Microsoft
operations would not be good for either, operationally. I heard there
was an ongoing antitrust case against Microsoft, these things happen.
Ross F.
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?
>
> Intel and Microsoft both seem to have strong near-
> monopoly market power, and their products are clearly
> strong complements. So the standard industrial
> organization analysis would suggest that merging them
> would produce lower prices *and* more profits for the
> merged firm. Perhaps weak competitors to them
> would lose, such as Apple or TI, but one expects
> huge welfare gains for all from cheaper computers.
>
> Of course this seems political difficult to see, mainly
> because many people work off a simple "all concentrations
> of power are bad" heuristics. A good test of an economist
> is whether they are willing to let economic theory override
> such heuristics in specific cases.
>
> Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
> Asst. Prof. Economics, George Mason University
> MSN 1D3, Carow Hall, Fairfax VA 22030
> 703-993-2326 FAX: 703-993-2323
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:05:21 MST