Merger Analysis and the Treatment of Uncertainty: Should We Expect Better?

47 Pages Posted: 19 Oct 2005

See all articles by Michael L. Katz

Michael L. Katz

University of California, Berkeley - Economic Analysis & Policy Group

Howard A. Shelanski

Georgetown University

Date Written: September 20, 2006

Abstract

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

Katz, Michael Louis and Shelanski, Howard A., Merger Analysis and the Treatment of Uncertainty: Should We Expect Better? (September 20, 2006). UC Berkeley Public Law Research Paper No. 821234, Available at SSRN: https://ssrn.com/abstract=821234 or http://dx.doi.org/10.2139/ssrn.821234

Michael Louis Katz

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States

Howard A. Shelanski (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

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