Industrial Organization essay

Basically, the modern economy is characterized by the high level of competition which often prevents many companies from effective cooperation. Nevertheless, it is possible to find numerous examples of an effective cooperation between companies which are traditionally positioned as competitors. In this respect, it is possible to refer to the example of Intel and AMD, the companies which are considered to be two major players in the modern IT and computing market but which had a significant experience of close cooperation and interaction. It is necessary to underline that the role of repetitive games in cooperation of these companies was quite significant that proves the fact that repetitive games are really important to the companies which tend to cooperation regardless the possible competition that may grow in their relations.

Speaking about Intel and AMD cooperation, it should be pointed out that these companies initially originate from the same background. What is meant here is the fact that the founders of Intel and AMD initially worked together that, to a significant extent, determined their further cooperation based on the mutual trust and high respectability of partners in relation to each other. In fact, their cooperation was based on the trust and their partnership cannot be characterized as the cooperation based uniquely on business interests, in this respect, it should be said that basically the cooperation of Intel and AMD started when the former signed a contract with IBM which implied that there should be an alternative supplier but Intel (Gitlow 137). In such a situation, Intel naturally referred to AMD which should guarantee the reliable supply of IBM as a client of Intel.

It is worthy of mention that the two companies working in the same segment of the market were not in the equal position. To put it more precisely, Intel was the leader of the market that tended to the monopolization of the market. In fact, it occupied the dominant position while AMD was just a kind alternative to the total monopoly of Intel. Nevertheless, such a different position of the companies did not prevent them from the close cooperation, which as it has been already mentioned above was mainly based on mutual trust and reputation of both companies as reliable players in the market. The cooperation between Intel and AMD proved to be highly efficient to the extent that the companies even shared some of their technologies in order to receive higher profits from their mutual functioning in the market.

Naturally, their cooperation was also stimulated by the objective economic factors such as the necessity and demands of consumers to have alternative to Intel but, nevertheless, it is necessary to underline that their cooperation was mutually beneficial. However, the companies eventually became severe opponents and stopped their cooperation but this was basically the result of the violation of the basic principles of their repetition game since Intel attempted to ignore the interest of AMD and made efforts to totally monopolize the market that was apparently unfair in relation to its business partner. As a result, nowadays companies are competing with each other and it is worthy of mention that even though AMD remains on the second place after Intel, its positions are still quite good, while Intel began to gradually lose its positions (Gitlow 166).

In such a way, it is obvious that the repetition games are very important to the business, especially to the cooperation between companies which may be competitors. In fact, the principles of repetition games can help such companies unite their efforts and cooperate effectively for the benefit of each player.

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