Estimating Discrete Games with Many Firms and Many Decisions: An Application to Merger and Product Variety

Ying Fan and Chenyu Yang

No 18199, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents an estimation method scalable to discrete games with many firms and many decisions. The method is applied to study merger effects on firm entry and product variety in the California retail craft beer market. Simulation results indicate that a merger, where a large brewery acquires several craft breweries, reduces product variety without efficiency gains, but increases variety with an efficiency in reducing fixed costs. Post-merger, firm entry occurs, but fails to counteract the merger’s negative effects on both consumers and total surplus. The fixed cost merger efficiency reduces, but does not reverse, the negative welfare effects.

Keywords: discrete games; incomplete models (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 L66 (search for similar items in EconPapers)
Date: 2023-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18199 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18199

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18199

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().