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To: Bearded One who wrote (21646)	11/23/1998 1:19:00 AM
From: Gerald R. Lampton	Read Replies (2) \| Respond to of 24154

I would think that any harm to any competitor hurts competition by definition. No. Think about it this way: if a market has 50 competitors, and some new process that makes production more efficient has economies of scale that take out 48 of the competitors, with only two remaining of equal size, 48 competitors have been harmed. Competition has not, because consumers derive the benefits in the form of lower prices or better products from the more efficient production process employed by the two remaining competitors. Thus, the harm has to be offset by some benefit to consumer welfare. Assuming this make[s] legal sense, then if the DOJ shows that Microsoft's actions did not benefit the consumer in any way, then there was no offsetting the harm they did to the competitor and thus consumer welfare was reduced. No. To prevail on causation, as a plaintiff, you have to prove that the defendant's conduct caused some harm that the court can remedy. Microsoft does not have to show anything; the government has to show that Microsoft's conduct caused harm. Furthermore, the government has to show that the harm Microsoft caused was to "competition," not just to competitors. The distinction between harm to competitors and harm to competition is a tough one to understand. I certainly do not pretend to understand it very well. But the distinction is real and extremely important. What do you think of the accusations (which the press seems to have accepted) by Steve McGready that Microsoft forced Intel to stop software research? That lack of research harms us, but is that a direct claim against Microsoft or is it just a demonstration of their power, or is it bubkis? I do not know what to think, except that I have no doubt his version will be hotly contested. As for Hayek, I guess I'm going to have to read him. I think you will be well rewarded by the effort, whether or not you end up agreeing with him. One thing that strikes me is the strong parallel I see between the spontaneous extended order theorized and described by Hayek and the OSS movement. As you seem to know more about that movement than I, perhaps you can deepen my understanding of this after you've gotten a good understanding of Hayek's thinking. Probably the best book to get a solid understanding of Hayek's views on the extended order is his absolutely damning critique of socialism, "The Fatal Conceit," but the concepts are described in greater depth in "The Constitution of Liberty" and "Law, Legislation and Liberty," where he discusses the nature of law and the proper role of government in a free society.