From: Robin Hanson (rhanson@gmu.edu)
Date: Thu Sep 30 1999 - 12:38:18 MDT
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
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