Behavioral Antitrust and Merger Control: Comment

Abstract

The paper comments on a Paper by Werden et al. on behavioral antitrust and merger control rejecting the use of behavioral economics antitrust analysis. It argues that the authors underestimate how fundamentally behavioral economics challenges standard economics antitrust analysis. Firstly, behavioral economics can hardly be declared entirely inapplicable to firm behavior. For certain specific environments there may be reasons to believe that firms behave non-rationally in predictable ways. Secondly, behavioral biases can generate real externalities providing a justification for state intervention that is deemed paternalistic by Werden et al. Finally, behavioral economics suggests that preferences are context dependent, challenging the foundations of welfare economics. This last point is where new economic theory is needed most desperately.