Predicting the Price Effect of Mergers with Polynomial Logit Demand
We propose a polynomial logit model to quantify the price effects of mergers in a static Nash setting. The proposed model is parsimonious in parameters and is shown to have excellent predictive power, rivaling the in-sample and out-of-sample predictive accuracy of the widely-used AIDS model.The analysis, using actual scanner data on bread sales, demonstrates that a linear logit model is likely to over-estimate the merger price effect.
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Volume (Year): 7 (2000)
Issue (Month): 2 ()
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- Werden, G.J., 1996.
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96-01, U.S. Department of Justice - Antitrust Division.
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"Simulating The Effects Of Differentiated Products Mergers: A Practitioners' Guide,"
Proceedings: Strategy and Policy in the Food System: Emerging Issues, June 20-21, 1996, Washington, D.C.
25942, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
- Gregory J. WERDEN, 1997. "Simulating The Effects Of Differentiated Products Mergers: A Practitioners' Guide," Department of Resource Economics Regional Research Project 967, University of Massachusetts.
- Philip Crooke & Luke Froeb & Steven Tschantz & Gregory Werden, 1999. "Effects of Assumed Demand Form on Simulated Postmerger Equilibria," Review of Industrial Organization, Springer, vol. 15(3), pages 205-217, November.
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