Challenges in Merger Simulation Analysis
Author(s)Knittel, Christopher Roland; Metaxoglou, Konstantinos
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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.
DepartmentSloan School of Management
American Economic Review
American Economic Association
Knittel, Christopher R., and Konstantinos Metaxoglou. “Challenges in Merger Simulation Analysis.” American Economic Review 101.3 (2011): 56–59. Web.
Final published version