Merger simulation with nested logit demand
Abstract. In this article, we show how to implement merger simulation in Stata
as a postestimation command, that is, after estimating an aggregate nested logit
demand system with a linear regression model. We also show how to implement
merger simulation when the demand parameters are not estimated but instead calibrated
to be consistent with outside information on average price elasticities and
profit margins. We allow for a variety of extensions, including the role of (marginal)
cost savings, remedies (divestiture), and conduct different from Bertrand–Nash
behavior.
View all articles by these authors:
Jonas Björnerstedt, Frank Verboven
View all articles with these keywords:
mergersim, merger simulation, aggregate nested logit model, unit demand and constant expenditures demand
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