Predicting the Price Effect of Mergers with Polynomial Logit Demand

Atanu Saha and Peter Simon

International Journal of the Economics of Business, 2000, vol. 7, issue 2, 149-157

Abstract: 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.

Keywords: Mergers; Antitrust; Discrete Choice; Logit (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/13571510050084497

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