ECO 550 Discussion Week 10 Managerial Economics Apply Froeb’s Analytic Method

Apply Froeb’s Analytic Method: Who made the bad decision; what information did they have, was it good, bad, unclear; and what was their incentive?

Understanding the Robinson-Patman Act. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/price-discrimination-robinson-patman

Intel made large loyalty payments to HP in exchange for HP buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled the case by paying $1.25 billion to AMD.

• What incentive conflict was being controlled by these loyalty payments?
• What advice did Intel ignore when they adopted this practice?
• Why did they ignore it?

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