If This Is Monopoly In Action, Bring It On

by Don Boudreaux on October 29, 2007

in Antitrust, Prices

Today I sent this letter to the Gray Lady:

You allege that Intel is guilty of “abuse of market power to protect [its] monopoly” (“F.T.C. Goes AWOL,” October 29).  Sounds terrible – until we read that Intel’s offense is to offer “big discounts and rebates to computer makers who minimize the use of processors made by rival Advanced Micro Devices.”  In other words, to keep customers, Intel keeps its prices low.

Monopolists raise prices; firms facing competition do not.  Intel keeps its prices low, meaning that it behaves competitively.  Yes, Intel’s pricing practices make life more difficult for AMD and other rivals, but that’s what competition is supposed to do.

Sincerely,
Donald J. Boudreaux

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