Question

Take any of the firms mentioned in the Modern Monopoly discussion thread and discuss the actual competitive environment they compete in. The discussion can include information on market shares, but more importantly what are the true definitions of the markets and the list of competitors they face? How strong are these competitors? What creates advantages and disadvantages and how do these stack up? You should use the conditions necessary for Perfect Competition for a partial guide to this thread.

Answer 1

Intel is known for world-wide producer of microprocessors, it has long years of dominating the market in the computer industry. The actual environment competition is near absence based on its superior technology. It has small competitor AMD fluctuating market of 15-20% and when AMD market share goes above around 20, Intel starts its strategic pricing and using market power to drive down AMD. Intel does not want AMD to completely out of market as it will make anti-trust law and scrutiny more focused on its activities.

Intel and AMD work in wholesale market and face competition on the basis of innovation and new and efficient processor. Intel moves out to care about having a meagre AMD’s market share and driving out, in server processor production, where Intel has 98.3%  market share. The market seems as duopoly competition, A Stackelberg oligopoly is well suited here, as Intel is a leader and AMD is follower both producers homogeneous goods. Intel pricing strategy influences the decision of AMD. and demand for intel processor is like perfect competition i.e. but not as a price taker, its price maker. It can increase the price and influence the market, but doing so means expanding the monopoly power will induce scrutny. Intel ties up with Dell and another brand that make market disadvantageous for AMD as it is expected that AMD process works with some lag.

both companies are locating itself in competing in the much larger domain, and end-uses are mobile, tablet etc. AMD now focusing on a new market to gain the market share. It is very different than in the theory of monopoly and perfect completion. It has different ties up with other firms to produce a superior product. It can be seen as multi-product firm whose completion differ with product. Its new innovation that makes very new product that gives high-end performance makes one better off and other worse off.