Competition in the Microprocessor Market: Intel, Amd and Beyond
Competition in the Microprocessor Market:
Intel, AMD and Beyond
André Semmler
October 17th, 2010
Abstract
This paper analyzes the competition in the microprocessor market be-tween Intel and AMD. The evolution of market structure is traced and it is shown that the main ways in which these two companies compete is through Price, Technological Innovation and Vertical Integration. Empir-ical Research is conducted showing consumer preference across two coun-tries. A model is sketched in which Intel acts as the incumbent and AMD the fringe rm. We also undertake an empirical investigation through a novel empirical technique. Yet new technological development erodes the market position of these two rms.
1 Introduction
This paper will analyze the form and type of competition between rms in a segment of the information-technology market. Its main focus will be on the personal computer microprocessor market and the competition between two companies, Intel and AMD. In this case, Intel is considered as the incumbent, and AMD the fringe. For our imperical study we use the paradigm of struc-ture, conduct and performance
1
which has frequently been used in Industrial
Organization Studies. We will particularly focus on the evolution of the mar-ket structure, conduct of the rms in the industry and performance and other competition related topics will be discussed.
As concerning the microprocessor industry, it is well known that Intel and
AMD are the two world market leaders in the production of microprocessors.
Intel has a market share of 81.7%, while AMD has a market share of 16.9%.
Intel is the larger and historically older of the two companies. A duopoly is de ned as a market in which the greatest part of the market share is held by 2 companies but in our case there are companies with uneven market shares. The microprocessor market can be de ned as a oligopoly with an incumbent and a fringe rm, since there are no other large microprocessor
Intel, AMD and Beyond
André Semmler
October 17th, 2010
Abstract
This paper analyzes the competition in the microprocessor market be-tween Intel and AMD. The evolution of market structure is traced and it is shown that the main ways in which these two companies compete is through Price, Technological Innovation and Vertical Integration. Empir-ical Research is conducted showing consumer preference across two coun-tries. A model is sketched in which Intel acts as the incumbent and AMD the fringe rm. We also undertake an empirical investigation through a novel empirical technique. Yet new technological development erodes the market position of these two rms.
1 Introduction
This paper will analyze the form and type of competition between rms in a segment of the information-technology market. Its main focus will be on the personal computer microprocessor market and the competition between two companies, Intel and AMD. In this case, Intel is considered as the incumbent, and AMD the fringe. For our imperical study we use the paradigm of struc-ture, conduct and performance
1
which has frequently been used in Industrial
Organization Studies. We will particularly focus on the evolution of the mar-ket structure, conduct of the rms in the industry and performance and other competition related topics will be discussed.
As concerning the microprocessor industry, it is well known that Intel and
AMD are the two world market leaders in the production of microprocessors.
Intel has a market share of 81.7%, while AMD has a market share of 16.9%.
Intel is the larger and historically older of the two companies. A duopoly is de ned as a market in which the greatest part of the market share is held by 2 companies but in our case there are companies with uneven market shares. The microprocessor market can be de ned as a oligopoly with an incumbent and a fringe rm, since there are no other large microprocessor
References: [1] Brock, W. A. (1983) "Pricing, Predation, and Entry Barriers in Reguladted Industries" in Evans, D [2] Kato M. and W. Semmler, (2010), Dominant Firms, Barriers to Entry Capital and Antitrust Policy , forthcoming Festschrift for [5] Varian, Hal R., (1996), Intermediate Microeconomics A modern approach , New York, W.W [6] Weiss, L. W. (1963) "Average Concentration Ration and Industrial Performance" The Journal of Industrial Economics, Vol