Consequences of model choice in predicting horizontal merger effects

Matthew T. Panhans and Charles Taragin

International Journal of Industrial Organization, 2023, vol. 89, issue C

Abstract: How practitioners model competition influences the predicted effects of a merger. We show how a Bertrand price setting and a second score auction model can be nested within a general bargaining framework. Through numerical simulations, we then show how the predicted merger effects vary with model choice, and that two commonly used strategies for obtaining demand parameters can yield markedly different outcomes across the models. Finally, we show how model and calibration strategy choices affect the magnitude of predicted harm in the 2012 Bazaarvoice/PowerReviews merger.

Keywords: Bargaining models; Merger simulation; Horizontal markets (search for similar items in EconPapers)
JEL-codes: K21 L13 L41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:89:y:2023:i:c:s016771872300067x

DOI: 10.1016/j.ijindorg.2023.102986

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