Merger Analysis and the Treatment of Uncertainty: Should We Expect Better?
47 Pages Posted: 19 Oct 2005
Date Written: September 20, 2006
Each stage of merger analysis involves predictions about uncertain events. The quality of merger enforcement and its ability to improve consumer welfare depend heavily on how well the federal antitrust agencies cope with such uncertainty. The agencies and the courts have to date adopted an approach to uncertainty that runs a substantial risk of allowing harmful mergers and of blocking beneficial transactions. This article examines how decision theory could be applied to the analysis of uncertainty in reviewing mergers, thereby improving antitrust enforcement and its impacts on consumer welfare.
Keywords: Mergers, uncertainty, decision theory, antitrust
JEL Classification: L40, K21
Suggested Citation: Suggested Citation