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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