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Calibrating the AIDS and Multinomial Logit Models with Observed Product Margins

Gloria Sheu and Charles Taragin
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Charles Taragin: Economic Analysis Group, Antitrust Division, U.S. Department of Justice

No 201207, EAG Discussions Papers from Department of Justice, Antitrust Division

Abstract: We show how observed product margins may be used in lieu of an observed market elasticity to calibrate parameters for two commonly used demand forms: the Almost Ideal Demand System (AIDS) and the multinomial logit. This technique is useful for antitrust practitioners interested in simulating the e ects of a merger, since estimates of product margins are often easier to obtain than estimates of market elasticities.

Keywords: demand calibration; multinomial logit; almost ideal demand system; AIDS (search for similar items in EconPapers)
JEL-codes: K21 L40 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2012-10
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:doj:eagpap:201207

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