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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Year of publication:	2000
Authors:	Saha, Atanu ; Simon, Peter
Published in:	International Journal of the Economics of Business. - Taylor & Francis Journals, ISSN 1357-1516. - Vol. 7.2000, 2, p. 149-157
Publisher:	Taylor & Francis Journals
Subject:	Mergers \| Antitrust \| Discrete Choice \| Logit

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005632697