From: Peter C. McCluskey (pcm@rahul.net)
Date: Thu Oct 14 1999 - 20:19:30 MDT
rhanson@gmu.edu (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
>>merger.
>
>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 (http://crit.org/critmail.html): http://www.rahul.net/pcm | Accept nothing less to archive your mailing list
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