Partial identification and mergers

This paper discusses policy choice under ambiguity in the context of merger simulation. We do so by incorporating the uncertainty about post-merger conduct into a simple merger simulation model. We isolate the problem of uncertainty regarding post-merger conduct by working with a simple “conduct parameters” model in the spirit of Bresnahan (1982) and Lau (1982). We then apply Manski’s (2011) analysis, and discuss policy choice under the maxmin, minimax-regret, and expected utility criteria.