Information and Permitting: Merger Review, Drug Approval, and Food Labeling

This dissertation investigates how welfare is shaped by asymmetric information between firms, consumers, and regulators, and how targeted policy interventions can mitigate the resulting distortions across three domains: merger control, drug approval, and food labeling. The first chapter analyzes merger control in a setting where firms have an informational advantage over regulators concerning synergies. While a stronger informational advantage increases total information, the resulting rise in asymmetry reduces welfare—unless the regulator can commit to a decision rule. The second chapter studies drug approval in a setting where firms privately observe product safety and self-select into investment. Welfare improves when the regulator uses price to screen firm entry, whereas relying solely on scientific evaluation criteria proves less effective. The third chapter analyzes food labeling in a setting where some consumers are unaware of key product attributes, showing that mandatory warning labels are most effective at safeguarding consumer welfare because they withhold positive information from the unaware. Together, these essays offer theoretical frameworks for understanding and addressing welfare losses resulting from informational disadvantages on the part of regulators or consumers.