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Challenges in Merger Simulation Analysis

Author(s)
Knittel, Christopher Roland; Metaxoglou, Konstantinos
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.

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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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Abstract
In this paper, we share our experience with merger simulations using a Random Coefficient Logit model on the demand side and assuming a static Bertrand game on the supply side. Drawing largely from our work in Knittel and Metaxoglou (2008), we show that different demand estimates obtained from different combinations of optimization algorithms and starting values lead to substantial differences in post-merger market outcomes using metrics such as industry profits, and change in consumer welfare and prices.
Date issued
2011-05
URI
http://hdl.handle.net/1721.1/75109
Department
Sloan School of Management
Journal
American Economic Review
Publisher
American Economic Association
Citation
Knittel, Christopher R., and Konstantinos Metaxoglou. “Challenges in Merger Simulation Analysis.” American Economic Review 101.3 (2011): 56–59. Web.
Version: Final published version
ISSN
0002-8282
1944-7981

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