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 - Department of Economics; Haas School of Business

Howard A. Shelanski

Georgetown University Law Center

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 L. 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 L. Katz

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

Haas School of Business ( email )

Berkeley, CA 94720
United States

Howard A. Shelanski (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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